-- Posted Friday, 29 June 2012 | | Disqus

Recall that a little more than a week ago, in a headline atop one of these commentaries, we invited you to “Join Us as We Short Every Stupid Rally.” And why not? Stocks are probably in a bear market now, and making money on the short side should be as easy as stringing beads, right? Well, not exactly. In the several years that have passed since we last experienced a full-blown bear, we’d forgotten how devious he can be. Expecting the worst, we somehow still put out advice to Rick’s Picks subscribers Wednesday night that had them looking for a last-gasp rally to get short. We even gave them a go-ahead to get long cautiously, based on a buy signal in the E-Mini S&Ps that had been triggered a day earlier. When stocks opened Thursday morning, however, what we saw instead was a 170-point collapse in the Dow on news that the Supreme Court had upheld Obamacare. The funny thing is, even bears who stuck to their guns could have lost money, since stocks came roaring back in the final hour.

Of course, all of this was stage-managed by institutional traders who make their living stealing from widows and pensioners, front-running their own customers and deftly exploiting fear and panic that they themselves have helped to incite. In this case, They pulled the rug at the opening, even knowing that the Supreme Court’s ruling seems likely to whip anti-Obama sentiment into a frenzy, sparing us four more years of the most rabidly anti-business President in U.S. history. Investors seem to have figured this out for themselves, and by day’s end they’d pushed the Dow back to nearly even at the bell. For DaBoyz, meanwhile, exploiting the 350-point swoon was all in a day’s work.

Too, Too Scary

So where does that leave us in our quest to make money being short in a bear market? Obviously, one cannot get short and simply stay that way. It’s just too dangerous. And too scary. Yesterday’s whoopee-cushion recovery, for one, unfolded in just 90 minutes – about a fifth of the time it had taken for stocks to reach their intraday lows. Permabears should keep this in mind as they attempt to leverage the downside during what is still only speculatively a bear market. They should also recognize that moments of relaxed satisfaction and pleasure will be fleeting. For even if the Dow Industrials were to fall to 1000, most of the more-than-90%-loss will have occurred in spasms measured in minutes and hours. The rest of the time – days, weeks and sometimes even months at a stretch — will have been spent with shares in a psychologically excruciating state of limbo…waiting…waiting…waiting for the other shoe to drop.

This will call for great patience as well as the understanding that bear markets always try to disguise themselves so that bullish arguments never stop sounding persuasive. In the meantime, we remain steadfastly committed to the task of Shorting Every Stupid Rally. And, make no mistake, it’s possible to do so — time and again — not only without getting hurt if the stock market continues to rise, but actually making money when we are positioned against the trend as we sometime will be. How well have we done at this? We invite you to visit the chat room, where you can ask subscribers yourself. Click here for a free trial subscription to Rick’s Picks that will entitle you to all of our daily trading recommendations, access to the chat room and to impromptu trading sessions held online during market hours. If you’d simply like to have Rick’s Picks commentary delivered free each day to your e-mail box, click here.)

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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indication of future results, so let the buyer beware. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2012, Rick Ackerman. All Rights Reserved.www.rickackerman.com

-- Posted Friday, 29 June 2012 | Digg This Article | Source: GoldSeek.com

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