Roger, I'm terrible at calling market directions. I should have a big sign taped to my computer saying, "buying puts on the S &P 500 is not allowed". Fortunately, I do much better picking individual stocks. With that said, I think that the key to the direction of the market over the short term will be determined by how much money is flowing in from foreign markets.
Todays action, judging by the speed of the advance, looked to me as though it was propelled in part by a lot of shorts throwing in the towel. I think it's almost a foregone conclusion that the market will open up tomorrow. But after that, I'm not sure. If foreign money continues to flow in, the market averages should continue up. Otherwise, without foreign inflows, I would expect the small caps to outperform the large caps through the end of the year. As to the breadth of today's move,however, I think the numbers can be misleading. Why? Because every market maker marks up his merchandise when the bull is snorting as it was today.
The move today did look powerful. But. But the economy is getting stronger and it wouldn't take much for fears of higher interest rates to drive this market back down.
Personally, I'm playing both sides of the street. I'm keeping my longs which look like they have potential to go higher, based on fundamentals, and also holding my short positions in what you termed "losers and scam stocks." If the market continues up, I'll continue doing what I have been doing for some time, nailing down profits.
One final comment. If the YK2 stocks get a big boost up from the Cruttenden conference later this week, I'll probably initiate short positions in this group. Even though some of them, e.g. Zitel, fall into the scam stock catagory, I've been leery of shorting them because of the hype. |
