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Getting Ready To Average Into Short Stock Market Funds

Stock-Markets / Stock Index Trading Sep 08, 2009 - 12:23 AM GMT

By: Bill_West

Stock-Markets

Trade Actions:

Buy SH ( Short SP ) at 57 or better
Buy RWM ( Short Russell ) at 48 or better


Market Outlook/Potential Opportunities:

Gold is stuck in a pennant formation, torn between two arguments as to which way it will turn. Technically we are still in that formation. But we did get stopped out on DZZ. This is an Exchange Traded Ultra short Note on Gold. September appears to be the month that Gold breaks out of its pennant formation and now it looks like it might be up, but we are not going to chase it. We will wait for a good confirmation one way or the other and then buy into a retest. I still feel there could be a false breakout setting up in Gold. The stock market still has a few upward projections, but now has a couple of distribution days. We closed out the Aerospace position (ITA). We were filled nicely on our limit order. We are trying to buy some short funds, but only at our price on rallies. I feel that we will get a nice up move in these next two weeks to sell into. We might even try a dollar cost averaging type of approach where every two days of rally we buy another short fund. We do not want to go the Ultra-short route at this time. The magnitude of any correction is in question at this time. We only have two positions left so we have plenty of ammunition to attack the short side. Lets be careful how we do it.

I was asked how do I divide up positions. This is a portfolio that will at times have up to 10 positions. Each position should carry an equal dollar amount, so if you were trading this with a 50 thousand dollar account, each position would be $5000. So when you place a trade you are going to buy whatever number of shares to equal $5000. At the moment we are down to 2 positions so there is only 10% invested at this time. The rest should be in short term instruments (money market). I know it is tough just keeping so much of the portfolio on the sideline, but the big money in this account is made when we get some great lineups in a lot of markets and have the cash to push it in. Right now, I guess that I am in a risk aversion mode, but that could change very quickly.

Current Long Portfolio:

Buy DTO (Ultra Short Note on Oil) @ 80 It closed at 86
Sell stop at 84
Long NLR ( Nuclear Energy ) @ 23.4 It closed at 22.8
Sell stop at 22.5

Current Short Portfolio:

None


Recently Closed Positions

Bought DZZ (Ultra Short Note on Gold) @ 21.2 Sold at 19

Bought ITA ( Aerospace ) @ 41 Sold at 45.2

Short RJA ( Agriculture ) @ 7.1 Bought at 7.1

By Bill West

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Thank You

If you want to contact me send me an e mail bill@stockbarometer.com

Important Disclosure
Futures, Options, Mutual Fund, ETF and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.
Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.
In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.
For a complete understanding of the risks associated with trading, see our Risk Disclosure.

© 2009 Copyright Bill West - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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