Covering More Shorts

The day started out with a negative tone on Wall Street and a positive tone in Washington as the transfer of power was completed.  But, as President Obama was giving his inaugural speech, the Dow was down 120 points.  As soon as Obama spoke his last word, the market immediately sold off and went down 200 points.  Then, of course, it got worse as the day went on.  It was strange.  It was almost as if investors were waiting to hear if Obama said something that would encourage them.  When he didn’t, the selling intensified.  Or, could it be that the selling had exhausted the last couple of months simple because everyone wanted to see how the market would react to a new president?When it didn’t rally, then in came the heavy selling. There’s no question that the selling has intensified.  But, I covered more of my short positions today because even if the medium term picture is up in the air, we’re still oversold. We’ve fallen about 15% in a straight line.  Since none of us know where a rally will start from, I’m choosing to cover my shorts a little at a time on the way down.  When we get that rally, if it’s a weak rally, then I’ll add the shorts back on at higher prices.  The only way to participate in this market is with income and/or trading.  Investing isn’t working right now as we’ve stated before.  Keep playing small and you can take advantage of days like today.


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January 2009
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