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Strategies & Market Trends : Short Selling, Dark Side, Bubble Busting Laboratory
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To: kailuabruddah who wrote (258)4/10/2006 2:18:24 PM
From: re3   of 361
 
Date: Mon Apr 10 2006 12:06
trotsky (@HMOs) ID#248269:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
the shares of HMO's have become good targets for shorting now that the fortunes of the Republican party are sagging. during Bushco's reign, this group has gone parabolic, producing an enormous price bubble. in the last 6 years, the HMO index has risen by 900% - from about 180 to 1,800 points. the LT chart is vertigo inducing. anyway, one of its major component stocks has entered a downtrend that has lasted about 3.5 months now, and is beginning to steepen. the weakness in UNH in turn has begun to spill over to other component stocks of the HMO index. presumably the market is beginning to price in the possibility that the mid term election will see the Republicans lose control of Congress ( they are the HMO's major political ally; Bill Frist is even a major shareholder in one , Cardinal Health ) .
in addition to the unhealthy look of the charts, sentiment on the group is extremely complacent. neither shorts nor put buyers show any inclination to pile on now that a downtrend has begun - presumably they have been burned too often in this group. when the bears give up in view of a beginning downtrend, it's a good bet the downtrend is the real McCoy.
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