Next up: Correction

We're going to be going through some tough times very soon (for reasons listed in my previous post ). If you're like me, you're licking your lips right now. You gotta love market corrections. All those panicing investors frantically selling off their positions; hoarding cash like squirrels. Once again I want to look at my favorite stock of late: Nordstrom, Inc. (Public, NYSE:JWN).



I was forced to sell my position and short this morning based on Macy's earnings and JWN's technicals. I still think it's a great company, but the risk was too high to own it into earnings, because even if the earnings are good, the stock is near a peak, and there's only so much that investors will are willing to pay for a stock (even a good one).
Whether we bulls like it or not, this market is ahead of itself. It's due for a correction. But my position is this: We are still in recovery mode. The economy will continue to get better, but not as fast as the market would like you to believe. Therefore, after the market retracts to it's macro support level that I illustrated in chart, we cover our shorts, and buy value stocks. When this happens, I like Ford Motor Company (Public, NYSE:F) (which I pre-emtively and mistakenly sold and shorted a couple days ago.However, it resiliantly kept gaining until today). Again, I like Nordstrom after the pull back. Also, look to techs and financials; I like The Blackstone Group L.P. (Public, NYSE:BX) to beat a market comeback and Brocade Communications Systems, Inc. (Public, NASDAQ:BRCD).
These are of course, looking a few weeks into the future. Until then, I'm short the market and looking for signs to cover. Remember that being short is just a bonus. You are facing ULIMITED RISK, so be ready to take any profits.
Warren Buffet likes to hold stocks forever and play value stocks' growth trend as stated in general Dow theory. Small timers like myself like to play the same trend, but I like to also play the secondary movements. The reason being, if a stock is worth 10 and it goes up to 11 then down to 10 then up to 12 you gain 20%. If you were to sell at 11 then re buy at 10 and sell at 12, you gain 30%. Shorting some of the way down is as I said a bonus (if the downturn is easy to predict like JWN and the market in general right now). When you're playing with stocks you like, it's not good to bet against them for too long.
Take my opinions as you will.
Good Luck,
-Samba