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Friday, June 26, 2009

 

the impending end of the bear market rally



fund my mutual fund links to a CNBC interview with paul desmond of the venerable lowry report. i'm a subscriber of his excellent letter, and let me tell you their indications are even more dour than this clip conveys -- and how much more dour can you get than the last thirty seconds? the report weekly commentary today was loaded with expectation of an impending retest and fail of the march lows, given the stubborn refusal of selling pressure to abate -- it's trended sideways from march -- or of buying power to expand, particularly in june as it has really collapsed in apparent anticipation of the end of the bear market rally.

desmond's letter has been brilliant throughout, and on the strength of the lowry analysis, particularly under these circumstances, i'd feel safe betting the farm against the market. (indeed my current short position, installed around S&P 925, couldn't be bigger.) it's quite hard to find anyone talking about new lows -- the current presumption is of nascent economic recovery and at worst a mild pullback on the way to a much improved earnings background, never mind any systemic concerns. i suspect that's all going to seem quite foolish with a bit of retrospect.

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I agree. My short positions are between SP 910-930, I am also starting to buy the Vix. Saying this I am still heavily in Cash, as these bear market rallies can be really stupid. Should the SPX get into the 1000's then I'll go all in on the short side.

 
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Are you short via the ETFs? SDS? TZA has been good to me recently.

 
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i've got some stops set to limit the damage if things head north, paul, as i agree there could be a push higher which would represent a better entry point.

 
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