August 18, 2011- Short Trade On the Index

This is the S&P 500 Daily Chart.  We currently are at resistance at least for the short term (Swing trading time frame of 3-7 days).  The weakest index are the emerging markets, particularly Hong Kong and China.  Most of them barely rallied from their oversold levels.  These indices only retraced 38.2% or the first Fibonacci retracement ceiling level.    Lighten down , or as most traders are taking comfort of course, just stay in stocks that are jockeyed.  It’s safer there.

Currently I’m short most Asian stocks using derivatives, via index futures on the Hang Seng @ 20, 240 level and Hang Seng index issues such as CNOOC (883), Hutchison (13), Daphne (210), Bank of East Asia (23) etc.  There’s a limited amount of stocks that can be shorted, so I just picked the attractive short candidates from availability.  The primary reason why I use CFDs (a derivative that is based on a stock price) and index futures is primarily to protect my capital, during periods where I believe we are drifting to the downside.

– The Faceless Trader

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