Adding to my short position.

Been quite busy so I haven't even logged in since I set up this site. I am out of town even now, so showing any good charts is quite diffuclt. I had to steal a chart from bigcharts.com just to show my reasoning for going short last week, and adding to my short position today.

The size of this chart is ridiculously small! My apologies. I'll quickly go through my reasoning for getting short. The labels above point out my reasoning.

#1- The last counter-trend rally which begain in Novemeber shot up and then broke trendline after trendline (shown in red). This is typical. It takes several trendline breaks to kill the excitement of the bulls, and embolden the bears. 3-5 trendline breaks in a counter-trend rally of this duration is pretty trypical. So here we are experienceing our second counter trend rally and we have had 3 trendline breaks. That is reason #1 to be on the look out for this rally to fade.

Reason #2 is that we are coming up to reisistance (a psychological barrier) of 930. It will take some considerable strength to go above 930 and the market has tried twice in the last week and not managed to break out.

Reason #3 is akin to #2 and that is that the market tried to break above the high set about a week ago, and couldn't pull it off.

Reason #4 is that the market sold off pretty convincingly today after briefly running up to 924 and then getting slapped down by sellers on higher volume. Not a good show of strength for the Bulls.

So todays sell-off could very well be the beginning of the end for this 2nd counter-trend rally and I have added to my positions in SRS and SDS to capitalize on it. With more time I would pick more volatile equities or cherry pick some leveraged ETFs such as financials with a good risk to reward ratio.

I made a mental note about a month ago that I knew the rally's days would be numbered when the banks started issuing more stock. Well this is reason #5. BofA just sold $13.5 bln in common stock. GS already raised money through a stock issuance. Wells Fargo and Morgan Stanley recently raised $16.6Bln in a combined stock&bond sale.

For now...I'm spent!

-Rick