From Jeff Clark in Growth Stock Wire:

Traders were ducking champagne corks on Wall Street yesterday. The S&P 500 closed in the green for the first time this year. Stocks have erased the 26% loss suffered during the first 10 weeks of 2009 and are now up 0.6%.

Yippee. Let the celebration begin.

Sadly, I left the party a couple weeks ago, when the S&P crossed over 855. Worse yet, I started slowly building short positions. So while everybody else was letting the good times roll, I was feeling a bit like a nun strolling through a brothel.

It is difficult to be cautious as stock prices race to the sky. After all, no one wants to be the lone teetotaler at a fraternity kegger party. But traders should worry about the aftermath.

The best parties are often followed by the worst hangovers. The trick, of course, is to leave before everyone strips naked and jumps into the pool.

We're nearing that point.

Read full article...

More Jeff Clark posts on short selling:

Jeff Clark: Stocks are dangerously close to a big sell signal

Jeff Clark: Trade on the short side right now

Jeff Clark says the market's ready for a correction... Here's how to make a quick 25%