Why It's Time To Short Stocks

JC Parets
January 31, 2024

I really like the risk vs reward from the short side here.

The divergences and rotation into defensives are finally there.

The Dollar has been strong throughout all of January.

That was the first heads up.

The new highs list peaked in mid-December on both the NYSE and Nasdaq.

So you can argue that we've been in a correction already, and that's it's just about to get worse.

And then here's what really did it for me.

It's the rotation into defensives that is the make or break for this bearish approach to the market:

To me it's that simple.

If Consumer Staples relative to the S&P500 are above those December lows, we want to be short equities.

If US Treasuries are above those December lows relative to High Yield Bonds, we want to be short equities.

If neither of those are true, then we'll reevaluate this approach.

In the meantime, I want to be shorting stocks where breakouts are failing to hold. And I want to be shorting stocks that breaking down from what theoretically should be a continuation pattern.

February is historically a great month to be shorting stocks.

I think we'll look back and add this year to that list.

Premium Members check the Rangefinder App for the trades. We put on one bearish trade today already. And we'll be adding more shortly.

Email me if you have any questions!

JC

 

 

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