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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis
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To: Q. who wrote (1820)9/26/1998 3:40:00 PM
From: drakes353  Read Replies (1) of 2506
 
Hey John:

Been off of SI for a few weeks to attend to other matters. Agree with your take on the market. FWIW, the S&P is up something like 9% this month. The beginnings of new bull legs are sneaky and this one isn't any different.

The Naz and the S&P got turned away last week on their first upside test of their 200 day MAs but I doubt that will prove to be much of a problem. 'Specially if Big Al does the right thing on Tuesday.

Three weeks of rally and the Investor's Intelligence Bulls - Bears are still solidly in negative territory. I don't expect a short term top to get put in until I see a Bulls - Bears reading of +20 or so. Rallies occuring in the face of continuing negative advisory sentiment usually have legs (See Nov '94, Oct '90, etc.)

Kind of bizarre but the market does look like it's keeping to a long streak of 4 year "price adjustments"....'98, '94, '90, '87, '82, '78, '74 and so on back to '62.

The broad based decline this year really kind of took the sport out of shorting for me. Much, much more satisfying finding great shorts in a runaway bull market. If I'm right about the market then finding good shorts should again become somewhat tough as we move into '99.

The real challenge on the long side over the next few weeks and months will be to try to find the Dell (Class of '94) or Cisco (Class of '90) of the '98 market bottom.

Having said all that, I also agree that this year tax loss selling season should be like shooting fish in a barrel on the short side. Many, many stocks will get unmercifully pounded into the dirt as '98 draws to a close.

Regards,

drakes353
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