Market Outlook: Scarier to Be Short, Harder to Be Long

I am a trader with a very short time horizon, but if I look through the lens of a hedgie or fund manager I would say it’s scarier to be short, but harder to be long. Getting short this market for anything more than a scalp is scary because of the persistent bid…but initiating new long investments seems crazy given how far we have run since early March. Perhaps the contrarian’s view (for those with a time horizon longer than 10 minutes) is to look for reasons to remain long rather than get short.

As short-term traders, we have the luxury of not trusting the market, just so long as we don’t impose our opinions on the market and fight its desired path (which for now is from the lower left to the upper right).

The bulls need to defend moderate support at 1037.25 (on the Emini) and target strong resistance at 1039, above 1039 and we should see momentum build in favor of the bulls. The volatility and volume in the markets continue to be anemic, but I would not rule out the possibility of a surge to and through moderate resistance at 1041.50 and towards 1047.25.

The few remaining bears need to push us back through moderate support at 1033.75 and target moderate/strong support at 1030. However, most traders will not give the short side a second look until we trade back through both moderate support at 1026.25 and strong support at 1023.

Now for a couple trade ideas…

GLBL is a potential gap fill back to 11.40 (yellow rectangle). I will consider buying the stock above 10.17 with an initial stop at 9.70 (though that stop would increase quickly if the stock pops).

I played GPOR several times Thursday and watched again Friday. If you are scalping, you could consider jumping in above 8.25 with an initial stop at 8.10. The three resistance levels GPOR needs to get through are 8.32, 8.37, and 8.45. Above 8.45 (the true breakout) and this stock should jump.

Disclosure: No positions were held at the time of publication, though that may change at any time.

Comments

[Baboon:]

What about the third option of being neutral?

Sep 13 10:02 AM

[Bob Byrne:]

Baboon,

A third option of being neutral probably best describes my trading. I continue to be opportunistic on both the long and short side. Most of my trading is still on the long side, but intra-day only...I have not been holding positions overnight. There is a whole group of traders/investors out there that get more bullish with every tick higher...and that often ends poorly for all but the most agile.

Cheers,
Bob

On Sep 13 10:02 AM Baboon wrote:

> What about the third option of being neutral?

Sep 13 12:11 PM