Feels Like February in Reverse: Time to Add to Short Positions

I am now going to be weighing more heavily on the short side of the book-building; on that side from here (920) to S&P 975 if necessary. It "feels" like late February but in inverse - no one wants to be short (long back then) and anyone who thinks about it is an idiot - as the market only goes in one direction (down then, up now).

I have two specific stocks in the solar space: DayStar Technologies (DSTI), and Ascent Solar Technologies (ASTI), that when they run almost always mark the height of insanity - both are exploding now. As countless 2nd and 3rd tier auto suppliers go out of business (government is supporting the 1st tier) this summer and fall, restaurants and shops around those suppliers die, and auto dealerships close their doors - we'll still have our 0% car financing, $6000 government supported Chrysler rebates, and 4.7% no money down FHA loans to get us through. So don't despair - GDP should explode higher on these figures as it did in Q2 2008 with a tiny $170B Bush rebate... that's peanuts to what we are going to have now. Countless unemployed will enjoy driving around listening to the stock market racing up on their way to the mall.. or to the grocery store - preferably Whole Food Markets (WFMI) of course.

I could be a few hours, days or weeks early, but at this pace we literally will reach all time highs in a month. Every 10 S&P 500 points from here I will layer in another, larger batch of shorts. I will say "uncle" when we cross all time highs (north of S&P 1400) which should come by Father's day at current pace. The market is 38% *straight* off the low. We talked about how the rubber band, reversion to mean trade would happen when the S&P was at an all time divergence of 40% from the 200 day moving average. We are now about 5% below the 200 day. In just over 8 weeks.

Wednesday night, Cisco (CSCO) reported -they missed on revenue, but beat on the bottom line. They cut a lot of workers. They see "stabilization". This will "shock" people in delight. Maybe we can rally 28 more days on this same news item.

Friday we will only lose 575,000 jobs, although we will revise upward the numbers the bulls were giddy about (and took as gospel) 30 days ago. This will "shock" people in delight. And then in 30 days, we will revise upward the 575,000. If we can rally 28 more days off the same news, so be it.

Tomorrow, we will have the bank stress test results and they will "shock" people in delight... oh wait, they were all leaked out today. That's ok, we'll officially be "shocked" tomorrow.

Please go fill up your gas tonight on the way home, and please ring the bell and tell your neighbors of the $3 gas coming in a few weeks and to enjoy it as our consumer discretionary recovery will be stoked by $3 gas.

Carry on.

p.s. I threw away half my Morgan Stanley China A Shares Fund (CAF) into the bull's mouth here.

Disclosure: Long Morgan Stanley China A Shares Fund; no personal position

Comments

[dcb:]

market very strange. looking at currencies dollar index is at resistance and it it fall s below this could mean much more rally to go esp in commodities and oil. UDN (dollar bear approaching 200 day moving avg. caution at this time appropriate. I believe NYSE being manipulated (easily so on low volumes) and you can't fight the boys.

May 07 07:37 AM

[mikebrah:]

I'm having trouble finding shares to short of BAC and COF this morning...anyone else? My orders just aren't getting filled.

MM

May 07 09:49 AM

[mikebrah:]

Ahh, they finally went through.

May 07 09:58 AM

[Baboon:]

This market is crazy on the long side. Too much complacency.

May 07 10:11 AM

[enigmadude:]

You sound like an angry bear with no rational reason given for shorting any of the stocks mentioned. I agree that there will be some downward movement in the market at some point, probably soon. But why pick on ASTI and DSTI? Did you lose some $$ on them in the past?

May 07 10:53 AM

[TraderMark:]

ASTI DSTI are my tells ... I've been in solar space since 2006, when ASTI DSTI start running usually we sell off within 3 days


On May 07 10:53 AM enigmadude wrote:

> You sound like an angry bear with no rational reason given for shorting
> any of the stocks mentioned. I agree that there will be some downward
> movement in the market at some point, probably soon. But why pick
> on ASTI and DSTI? Did you lose some $$ on them in the past?

May 07 11:29 AM

[Sober Realist:]

Sold my dryshippers yesterday. Looks like someone pulled the plug today.

May 07 03:08 PM

[Sober Realist:]

SWHC down big today. Beat your swords into ploughshares and grow a victory garden.

May 07 03:15 PM

[Dr. O:]

Agree; now that the bulls have exhausted themselves for the time being, the markets (not just US but most equity markets world wide) look ripe for a pull back. At what point would you cover?

I made a couple of comments on a previous article of yours from a bullish perspective which were poorly received, lol, but I should have pointed out that I am bullish on foreign, not domestic equities: BRIC, Australia, Canada, and commodities.

I don't own a share of a US stock, or index ETF, or bond, or mutual fund. In fact, I'm becoming uncomfortable holding cash in US Dollars. If the Dollar starts to fall off a cliff, again, I'll diversity my non-retirement dollars into FXA, FXC, and FXY, as well as SLV and GLD. FWIW.

May 07 03:43 PM

[TraderMark:]

SWHC was down due to a lousy dilutive offering


On May 07 03:15 PM Sober Realist wrote:

> SWHC down big today. Beat your swords into ploughshares and grow
> a victory garden.

May 07 06:13 PM

[TraderMark:]

Nothing egregious - I am looking for 870 to 890 for now but we'll see - the employment report will move the market strongly

Then I am looking for a wider range of 820 to 950 for a while

then later in the year a retest of 750 and I think that retest should be bought

we'll see if that roadmap is correct and even if it is dead on, timing it will be impossible

but thats my 40,000 point of view

I believe S&P earnings for 09 will be under 50, but analysts still cling go 60
even at 60, with a 15 multiple you are at 900

I find it hard to argue that in the worst recession since depression you can hang something higher than a FORWARD 15 multiple on this mess. But bulls will try

I expect range bound and wide range - today was a good day but things can reverse

as always I run a hedged portfolio; I just weighted it to short yesterday for a while

in this market can change in 72 hours


On May 07 03:43 PM Dr. O wrote:

> Agree; now that the bulls have exhausted themselves for the time
> being, the markets (not just US but most equity markets world wide)
> look ripe for a pull back. At what point would you cover?
>
> I made a couple of comments on a previous article of yours from a
> bullish perspective which were poorly received, lol, but I should
> have pointed out that I am bullish on foreign, not domestic equities:
> BRIC, Australia, Canada, and commodities.
>
> I don't own a share of a US stock, or index ETF, or bond, or mutual
> fund. In fact, I'm becoming uncomfortable holding cash in US Dollars.
> If the Dollar starts to fall off a cliff, again, I'll diversity my
> non-retirement dollars into FXA, FXC, and FXY, as well as SLV and
> GLD. FWIW.
>

May 07 06:15 PM

[TraderMark:]

SLV looks good here, not only do you get the precious metal thought but you can get some benefit from the (correct or incorrect) thought that the world will come roaring back "in 4-6 months"


On May 07 03:43 PM Dr. O wrote:

> Agree; now that the bulls have exhausted themselves for the time
> being, the markets (not just US but most equity markets world wide)
> look ripe for a pull back. At what point would you cover?
>
> I made a couple of comments on a previous article of yours from a
> bullish perspective which were poorly received, lol, but I should
> have pointed out that I am bullish on foreign, not domestic equities:
> BRIC, Australia, Canada, and commodities.
>
> I don't own a share of a US stock, or index ETF, or bond, or mutual
> fund. In fact, I'm becoming uncomfortable holding cash in US Dollars.
> If the Dollar starts to fall off a cliff, again, I'll diversity my
> non-retirement dollars into FXA, FXC, and FXY, as well as SLV and
> GLD. FWIW.
>

May 07 06:16 PM

[Wisdom vs. ...:]

you commented on CPSL a few days ago, and after i looked at it i could not figure out why its run was worthy of comment (good growth, and great PE before the run). were you saying it is unworthy of its new price, or simply that the entire china sm cap run was too high?

May 07 06:35 PM

[TraderMark:]

Not that the china small cap run was "unworthy" but some names are just speculative junk and in latter part of moves you see those stocks move. I don't know enough about CPSL either way to make a comment on it.


On May 07 06:35 PM Wisdom vs. Information wrote:

> you commented on CPSL a few days ago, and after i looked at it i
> could not figure out why its run was worthy of comment (good growth,
> and great PE before the run). were you saying it is unworthy of its
> new price, or simply that the entire china sm cap run was too high?

May 07 06:42 PM

[Sober Realist:]

Mark,
What's your opinion on WR. Good dividend. Any speculative bank stocks? CARV?

May 07 09:07 PM