September 1, 2011 - Why I'm Flipping to the Short Side

Featured Trades: (WHY I'M FLIPPING TO THE SHORT SIDE), (BAC)

1) Why I'm Flipping to the Short Side. We have had a nice run here on (BAC), posting a profit of 20% in just one week. The stock market is now at the top end of a one month range, so I am going to cut back some risk. The big gainers are always the first to go on the chopping block.

We have had a great 130 point rally off of the August 8 capitulation low. The market is getting artificially ramped up to overbought levels by month end window dressing, as portfolio seek to hide the damage caused by the worst month in the equity market in ten years.

Once we get through month end, I don't see any positive drivers for the market until Q3 corporate earnings releases begin at the end of September, or the FOMC meeting takes place on September 20-21, when some form of QE3 may be announced. An outlier would be a surprisingly good August nonfarm payroll report, to be released on Friday, September 2. This is an outlier that is way out there.

In a perfect world, we'll catch the next downdraft, take profits on our shorts, double up on our longs, and laugh all the way to the bank. Ah, yes, that perfect world. Something tells me that it will be harder than that.

The Justice Department's effort to block the AT&T and T-Mobile merger is definitely throwing a wet blanket on the market. The 3 cent pop in the Swiss franc this morning is also telling us that another round of 'RISK OFF' may be just around the corner.

Finally, I received a blizzard of emails from my Houston readers in the oil patch telling me 'great trade' on my recommendation to go short oil yesterday. They should know.

And for good measure, we are one headline away from another tape bomb, the next chapter in the unfolding disaster in Europe.

Add all this up, and it tells me to strap on more downside exposure. Hasta la vista Bank of America. Catch you again on the downswing. Well done Macro Millionaires! You have just added 100 basis points to your 2011 total performance!

In a perfect world, we'll catch the next downdraft in the markets, take profits on our shorts, double up on our longs, and laugh all the way to the bank. Ah, yes, that perfect world. Something tells me that it will be harder than that.

For these who wish to participate in Macro Millionaire, my highly innovative and successful trade mentoring program, please email John Thomas directly at madhedgefundtrader@yahoo.com . Please put 'Macro Millionaire' in the subject line, as we are getting buried in emails.

Flipping to the Short Side for a Trade

Legal Disclaimer

There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.