Seeking Direction
    In what should be the final busy trading week of the year, the markets are sending mixed signals. Futures are attempting to bounce off their lows. At the same time, Europe and Asia are lower. This week we will see high profile earning’s reports from Goldman Sachs (GS) and Research in Motion (RIMM). The economic calendar features reports on housing.
    For the week, the bulls need to make a stand. The impressive rally off the November lows now looks like a dead count bounce. The S&P 500 has violated its 200 day moving average and the DJIA is close behind. Any positive action this week could set the table for a low volume melt-up over the final 2 weeks of the year. A push lower will confirm the technical breakdown and put a bulls eye on DJIA 12,600.Â
    My trading strategy for the week is to lean short and avoid stocks that have a pending catalyst. If you want to short GS, wait until Tuesday. The same goes for RIMM on Thursday. In this environment, there is no need to step in front and try to be a hero.
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If GS fails this week, I’d expect everything else to come down with it. GS is by far the best brokerage firm currently and if they somehow disappoint, I could only imagine how bad things may be everywhere else. If RIMM falls, I can see folks like Cramer doing a quick turnaround which would cause it to fall even further. I think you’re right… it may be a good time to lean short this week but don’t play before earnings. Too easy to get burned I guess.
Good point Jorge. I’m too concerned with the risk to go short on a specific stock in this volatile market, but I am shorting the general market with some SDS shares (ultra short s&p500 etf).