Stopped Out Most of Short Positions, Waiting....; June 19,2009

The market rallied completely unexpectedly as I surely thought it would fall today after Friday's action. July 4th shortened weeks tend to be bullish but I don't usually pay much attention to that type of stuff. The market internals were not impressive at all today but the Dow did confirm the rise from Friday in the S&P and Nasdaq which removed the bearish non-confirmation I discussed the other day. Plus, with the rally today, most of the major indices made new highs to where it creates a clear 3 wave decline from the highs a couple weeks ago. This means it's quite possible the short term correction is over. The market structure in the short term is now unclear, so I stopped out about 60% of my short positions at the highs today (unfortunately). I will wait for clarity on the short term structure before I get aggressively short again. The key element to all this analysis is that the long term picture points strongly toward much lower levels in the stock market.........specifically this means an S&P crash to the 400s with a year or so. So I do not want to lose focus on the bigger picture. So I will continue to look for shorting opportunities only.

I am currently short the S&P with a covered call strategy on the SDS.