Once again, we had another good news report received like rotten eggs by The Street today in the form of Pending Home Sales. Though it beat expectations, the market sold-off and never looked back. This furthers the paradigm, that the market is not looking to satisfy the bulls or bears, but to inflict the most amount of pain, on the most amount of people. The bears no doubt were given a few rays of hope today, and will look for follow through tomorrow, but so often has been the case that these sell-offs are quickly bought up by investors. And unlike other sell-offs or late, we’ve seen enough consolidation prior to today’s market action, that we are quickly nearing oversold territory on a number of indicators in the short-term.
One thing that the bulls can tip their hat to is that they managed to hold the 20-day moving average and support in and around the 1130 level on the S&P. Another sell-off tomorrow could completely change the market behavior heading into earnings on Thursday, beginning with Alcoa (AA). As a result, I hedged my very bullish portfolio today with an UltraShort S&P position at the close (SDS). As a result, I reduced my exposure to the long side from 84% down to 35%.
