The title of the update references ‘if’ you would short, because even if the market is going bearish, cash is position. Working against the short/bearish view is contrary bullish sentiment (over-bearish), the fact that an alarming news event is driving some of it and the simple fact that historically at least (last 3 instances), stocks don’t top into real bear markets until many months after the first Fed rate hike.
That said, the technicals for the main indexes are what they are. Everybody is below the 200 day moving average (although I’d consider SOX to be still trying to hold its SMA 200), and SPX, NDX and DJIA are in rolling postures after the expected bounce that for all intents and purposes reached our planned bounce areas, if indeed it would be just a bounce off of the FOMC-driven lows in January. Those lows were ‘lower lows’ to the October lows and hence, as noted at the time, sentinels scouting for future bear activity.
My main gripe is that I don’t like to be bullied into a bearish stance by something like Ukraine/Russia. That is for media-stoked herds. But the lower lows in January came when Ukraine was just a glint in Putin’s eye. Retreating purely to the daily technicals, these markets appear to be rolling bearish.
This morning’s futures indicate a potential rally. If you would short, a recovery toward the SMA 200 (SPY, DIA, QQQ or other indexes/sectors that are doing similar rollovers) could be an opportunity to hedge or outright short (on a bounce as close to the SMA 200 as possible), if that is your thing. Caution/tolerance could be placed at recovery above the SMA 200s.
Personally, given the bleak sentiment backdrop, I am going to think long and hard before shorting anything. But again, these setups are what they are and as a well rounded market service (incl. TA), I think NFTRH would be remiss not to highlight them.
