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Just a refresher of some of my posts over the past few weeks:

From 7-7-2010
“While everyone thinks we have bottomed, I think we sell off again.

Probabilities, based on the charts, say we will make new lows and we will give back today’s candle. It should happen within a week or two. Depending on where we go on the downside, we should see a rally. That is it. Most of the time after that new low is made we get a really significant rally, but I don’t want to think beyond the new lows I think are coming. Lets remember where the trend is. Its down.”

From 7-29-2010
“I’ve been talking and fearful of a move that would create buy signals, but would turn out to be a major whipsaw. This move has happened to the upside, gave great buy signals, but by the time the signals are starting to show up, the market used so much energy to create these buy signals, that it would be time to selloff. I mentioned this in several posts in early July.”

From 8-7-2010
“What I’m looking for is a break of the orange line in the above chart, cause short covering etc, then I will sell into that and keep it lite as I think after the breakout there is a chance for more than a full retracement of the breakout.”

And I included this chart:

————-

Where are we now?

Why did you go long despite being suspicious of it?

Suspicions are not enough to trade off and can cause problems. Be “dumb,” make more money than by being “smart.”

What I have to do now

1. Abandon the long trade – This entails me selling my index long funds at the close Friday and going short.
2. Sell the 7 crappy stocks I bought at Friday’s close and move to the short side.

Nothing to be upset about, nothing to worry about. In swing trading, there is drawdown, this was one of them.

How am I going to short?

1. The 2x inverse index funds split 3 ways, SPX, NDX, RUT
2. ETFs like SSG, DTO, SDD, FAZ/SKF, REW, PSQ, TZA, SMN, ERY, EDZ, MZZ, DXD, QID, SDS, and SRTY (will probably use a variety of these, not all of them at the same time).

I’ll do this on Friday.

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