We escaped the big drop - for now

Hey, I have not posted for almost a month and got only one (direct) comment on my silence. I know you out there can do better in cheering me up.

Well, business trips, Easter holidays with my precious, good weather and - i have to admit - reading 'The Hunger Games' kept me from posting. But not from trading.

20 days ago, I was pretty pessimistic on stock markets, especially German ones. It looked like major support had been broken or was on the verge to break. Like the 6.600 on the DAX, which I consider an important level. Or the big drop in the S&P500 below 1.360 on the 10th of April - representing weakness by dropping below the 50-day-average.

My market sentiment was kind of mixed. We had a nice run since the beginning of the year in major indices. It somehow slowed down a little - especially the DAX. Also with a break in the European debt crisis and reasonable 'okay' economic numbers in the US, central banks had stepped of the easing throttle a little. Still, til the presidential elections would be in, a full-scale break-down was unlikely. But a correction seemed to be around - especially with Q1 numbers coming in and my sentiment being that outlooks would be not too rosy.

So what I did was entering 5 short positions on the DAX30 companies looking worst:
Siemens at 73.10 (S/L at 76.4)
Metro AG at 26.23 (28)
Daimler at 41.37 (45)
Commerzbank at 1.70 (1.90)
BMW at 66.76 (70)

It pretty much looks, like the markets recovered since then. The DAX dropped below 6.600 shortly, but recovered to 6.801. My chart indicators tell me to take a neutral stance here for the moment. DOW30 is close to a new high. S&P500 recovered significantly with 75% of stocks on an uptrend right now. With Apple Q1 results, NASDAQ jumped up also, looking like it might attack new highs from here.

From my 5 short positions (I used my CFD-account to trade them) BMW was stopped at 69.01 and later on Daimler was stopped at 41.01. I had lowered the S/Ls after first progress was made. Being neutral or slightly positive on the markets right now, I will further take down those S/L Limits now. If the markets further improves, the whole trade will be a wash. Commerzbank and Metro still have ugly charts; Siemens might be through with trending down, as they took down their guidance for 2012 a few days ago.

Generally speaking, I think we escaped a major break-down for the moment. This fits into the overall picture of mine, not expecting a bear market until the US presidential elections are behind us. But sometime later this year, the attention will focus back on the huge tax increases the US consumer has to bear in 2013. And with the elections gone, the US government and the FED will have bought some time. Kicking the can down the road, they will maybe ease their support for the markets. Being aggressive, you can ride the wave upwards a little longer. Otherwise - keep your powder dry and prepare for a drop several week or months down the road.
Disclosure: I am short Siemens, Metro AG, and Commerzbank. I do not plan to open positions on Daimler or BMW during the next 72 hours.