At the beginning of the year I listed 633 as my 2009 target for the S &P 500. We came close to that last week. My plan all along has been to lighten up on my short positions as I get close to that target. On Friday, I reduced my short exposure from 90.1% to 68.2%. The pessimism bandwagon was starting to get too crowded.
The latest S & P 500 earnings estimate has dropped from 42.26 to 32.41. With a conservative PE of 15 that puts the index at 486. I still think the stock market will continue to fall, but nothing moves in a straight line, so I decided to take some chips off the table. And if the market has a brief rally, I can always fully reload on the shorts.