Open Shorts

I have been looking for the market to go down for a while. The past few days therefore have seemed like an important change in validating that view. It would be nice to say that I had some huge shorts on. I don’t. At the moment, I am short the 10-year JGB and Santander (NYSE: SAN). The former is about the eventual funding crisis, which looks to be hitting Japan first. The latter is about a weak Europe, a weak banking system, and finally a weak market.

My short position with SAN started about 2 months ago when the price was in the $7.20s. I have provided the chart below to show what’s been happening. Back then, I thought I saw a head-and-shoulder formation in the making, that was in the process of defining the right side. Over the past handful of sessions, it appears that that formation has completed itself, signaling a big whoosh down to come. It is literally right at support, with a substantial air pocket underneath.