These are certainly testing times for anyone on the short side, such as myself. I think a lot of shorts have been shaken out over the past 2 weeks. I have held on due to my firm beliefs in the fundamentals, but good risk management practices dictate that I should consider reducing my position if the markets continue to rise from here. My sense is that we are probably near the end of this rebound rally, but I said that last week too. But rallies and declines usually end with a bang (I certainly re-learned that lesson when I sold additional units at almost the bottom of August's decline), and today's sharp rally certainly has that feel to it. I have continually said that my target range for the TSX rebound was 13,550 - 13,900. Today we reached 13,895.
Tomorrow will be a major test. Retail sales data for August will give a hint as to whether the American consumer still has some spending power up his/her sleeve, and whether people were spooked at all by the credit turmoil.
MARKET POSITION: SHORT (4 units)
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