This is why I am not a huge fan of holding my short positions for extended periods of time.

Ideally, I like holding a short 2-3 days. Once I get profits in the 4-7% profits, that is where I start getting itchy to cover my position. 

While I embrace shorting stocks when the market calls for it, I recognize too, that I am swimming against the current every time I do. 99.9% of the country wants the market to go higher, so when you are shorting the market, you are fighting a lot of forces, including the companies that want their stock to go up, the federal government, namely the Fed, that wants the market going up, and many more factors. As a result, I don’t pretend that somehow I am greater than all these forces at work. Instead, I take my profits when I get them and don’t let them run for extended periods of time. 

A perfect example of this is here in JPM today. Up 6.3% on news CEO Jamie Dimon purchased 500,00 shares of the company’s stock, or roughly $26 million dollars.

I covered my position once the market started to rally yesterday off of the lows, and took my 5.1% in profits with me. Had I continued to push this short position into today, the situation would be far different.. 

Here’s how I traded it:

 

Even when the market is trending in your favor to the downside, you still have plenty of headwinds as I’ve already described. When you have the profits, take them. Don’t press short positions it is never, ever a good idea. Be quick and be nimble, because for every hard sell-off there is a dead-cat bounce right around the corner, and if you don’t manage risk appropriately, any gains that you once had will quickly evaporate.