Aaron Armstrong, May 21, 2008

Last week it was very tough to start legging into Puts and short exposure on the indexes with prices just grinding higher but eventually enough catalysts came into place to make it worthwhile. The thing about a market that grinds higher into very high risk zones is that they can give it all back much faster than it went up. So instead of feeling very frustrated like I was on Friday and on Monday I am breathing a sigh of relief.

But should I be getting ready to go long or add back some short exposure I have reduced into this selling and into some major support?

For now I am still net short the indexes with SPY, QQQQ and IWM Puts, but about half of what I had on Tuesday. I took profits too soon. I also still have SDS, the UltraShort S&P 500 ETF to the tune of about 20% of equity. I also hedged up my energy exposure which has been my largest long position, those stocks started to act like sellers were using higher prices today for the first time in a while.

The Charts

Hope it helps!

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