WINTER IS HERE

I’m not buying VXX or HDGE or TLT or shorting any stocks, despite thinking the market will trade lower in the short term. Shorting stocks into oversold tapes have proven to be stupid over the years. Therefore, I’d much prefer the safety of cash, rather than letting greed grab me by the collar and toss me down a flight of stairs in an upside surge.

To start shorting now is tantamount to believing we are entering a prolonged correction/bear market. We haven’t had one in years, making it a very low probability trade.

Aside from the recent weakness, it’s worth noting, many large cap names have been struggling for a month. Significant sell offs in a number of large cap industrials and retail names have spooked some large investors out of stocks and into hedges. Nothing goes up in a straight line, nor down. If forced to guess, I’d say we chop around during February, with some stocks getting splashed over the pavement because of earnings shortfalls and others soaring on beats. After earnings season, we will resume the upswing in stocks and top out in March-April, setting up for a sublime shorting opportunity.