Sitting on my hands prior to the holiday

By Paul | Published: December 24, 2008

I’ve nearly pulled the trigger today on adding some shorts.  Then I decided against it because there’s no action in the market and no good confirmation.  My 50% long, 25% short, and 25% cash distribution seems alright for now.  But Figure 1 below leads me to want to add more to the short side.

As shown in Figure 1, the market is still clearly in a downtrend.  Moreover, we are at the top end of the channel.  So shorting at this point has a good risk/reward ratio.

S&P 500 ETF

S&P 500 ETF

In particular, Goldman Sachs in Figure 2 seems like a decent play.

Goldman Sachs

Goldman Sachs

But as I was saying, I’d rather wait for GS to break the triangle first before making a move.  With the current market, it’s better to be late than early.

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