Time to SHORT the S&P?

FRIDAY May 28, 2010

As you probably already know, the market rallied today…the S&P picking up 35+ points…3.29% … closing at 1103.

That’s good for obvious reasons, but also creates an opportunity because we might be able to take another short “ride” on the S&P 500…(like we did last Summer). However, this time I suggest we get on and hope to ride it down.

I’m sure you remember we made approx 9% in a relatively short time last summer … riding the S&P up.

The playing field looks to me much like it did last year…except inverted. There is a good chance we might see a short rally up to 1120-1130…but I have a strong feeling that we are going to revert lower … and test a bottom at 990 or so. The spread between 1130 & 990 is 140 points or 12.4%. My feeling is that we will probably trend lower over the next couple of months & test that low.

Therefore, I’m suggesting that you consider going SHORT the S&P 500 … once it reaches 1120, and plan to sell out if & when it reaches the low of 1020. That would yield a return of 8.9%...minus any commissions.

Like anything else, this is a bit of a gamble, but could work out in your favor. I think the conditions are right to consider it