Positions

Since March we have been building core or primary short positions in to market strength...

 While traders expected the uptrend to continue, we started using bounces and any strength to sell short in to at these areas in yellow. The reason why? It's not as simple as two charts, but they do sum it up...

 60 min negative divergences in the SPY and all of the other averages.

The Trend Channel was also early to show a change in character, we also looked at breadth charts and many others.

Now the dilemma is this... Every time since 2009 the Central Banks have injected liquidity in the market, it has surged, just look at the market and dates when QE 1 and 2 started and ended. If there's anything to this rumor, then the assumption is the market moves higher, except this time is not the same as the last several times, things are much worse now in Europe than ever and perhaps in the US too, I'm not sure we can use past precedent for future analysis.

The core equity shorts (no leverage-just a regular short) I opened are all in the green and include the following: CAT +24.8%; BIDU +19.3%; PCLN +16.41%; AAPL +6.87%; XOM +4.39%; BEAV +3.57%.

I added speculative long positions based on the positive divergence to take advantage of upside and hopefully sell them and add to shorts in to strength, but it also had the effect of hedging the short positions in case of a surprise Central bank intervention.

Some decisions are going to have to be made and we are going to need to pay extra attention to the smallest of details, that's where we'll find our edge.