Be Careful Shorting

short_selling_stocksAm I sure the market is going to crash? Of course I am sure. That is how tension in rigged markets is resolved. Does that mean everyone should start opening short positions? Another attribute of rigged markets is that the rigging mechanism always fails in the end but it is extremely hard to identify the point where it happens. There may be no way to actually profit from the crash unless one is lucky.

Right now stock market bears of all shapes and sizes are still using traditional technical analysis to guide their trading. This means taking a short position and placing a stop or buying a bearish exchange traded fund and placing a stop. There is no way to win using this strategy. Supply and demand lack relevance in a rigged market. When a short position is taken, high frequency trading firms know all about the position and immediately start trying to run the stop. Retail brokerage firms, give them all they want to know about customers’ positions and trades. This information is used in much the same way as ordinary traders used  odd lot statistics and put/call ratios to study sentiment of small traders. Is this a fair and legal practice for retail firms to engage in? Of course not, but one of the characteristics of a Fascist system is that laws are not enforced against a corporation if the corporation is supporting the goals of the corrupt government. Retail brokerage firms are assisting in driving the market higher, so any information they give about trades and positions is not even noticed by the S.E.C. or anyone with authority. If this issue gets exposed in the mainstream press, then it becomes a lot safer to short outright. With each each pillar of manipulation that is removed a reckoning becomes more likely. Take special notice of any evidence that the relationship just described is being exposed. Someday, only God knows when, short sellers will change their trading approach so they are less vulnerable to exploitation. There is no point in shorting and placing a stop. Shorting in this kind of a market is an all or nothing exercise. Any change in the mentality of short sellers is part of this equation.

Another situation to monitor is the level of awareness that central banks are now buying stock and holding it. Corporate buy backs began ceasing as soon as a few corporations start taking large losses on the shares they have repurchased. These are all tools of manipulation and a change in any of them can usher in the reckoning. Never forget that the initiatives to elevate asset prices for the benefit of the rich also destroy the economy at the same time. They will lose big time also. It is mathematically impossible for the majority to sell at a profit in a market where true value is honestly not present.

Yesterday, I added just a slight amount to a bearish position (Long TZA) but am still slightly over 80% in cash. As far as investing is concerned, having cash on hand for going long after the crash is still the most important thing and the eventual crash is a sure thing.00_logo_1

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About Fantasy Free Economics

James Quillian is an independent scholar,free market economist, teacher of natural law, teacher and originator of the Fantasy Free approach to economics. James Quillian does not believe lies. Contact: news@quillian.net
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