From everything I see and hear from 3:15pm onward, everyone (surprise, surprise especially on CNBC) said danger is just ahead of the curve and longs beware. Too many bears out there! We know the market will not crash if there are too many bears. The opposite may happen instead. Joe also said it tonight - the complacency factor of the shorts. The belief that shorting had been easy so it must be really easy again by just shorting into the strength tomorrow and Monday. If everyone thinks this way the market surely will not tank. Has anyone picked up any articles lately? They are filled with bearish undertones. When was the last time you have read about "loading up the truck now" advise? Also, there are piles of money parking at the bank ready to move into the market "at the correct time". The problem is no one will know when the "correct time" is until the papers quoting sources say Warren Buffett has started buying again.
At this juncture, I want to go light because the DOW has taken out a key resistence and there are still plenty of shorts around. I want to see if the market can confirm a new bearish trend before jumping back into being overall short. Contrary to LT's argument, there are plenty of opportunities to short stocks. Even with today's action, there are many non-participants as there are. If we are heading towards a crash for the rest of Oct, no one stock will be spared and one can always short the ones that are still bloated. Better be safe than be wiped out.
If we rally tomorrow and rally next Monday and Tuesday, 8100-8200 may become the next support rather than the current resistence. Another key indicator is S&P resistence at 1060-1065. If this one breaks, we will very likely move into a higher band of trading range until after the earning season. If today is a big headfake, we need a confirmation really quickly, like in tomorrow. if tomorrow is an up day, it has better be Monday or we are probably not going down any further in Oct.
AFS - closed at a key closing resistence at 70. A good put candidate only if it closes below $70 tomorrow decisively.
NBTY and TWLB - these vitamin makers have taken their lumps and the shorts are beginning to move out. Look for a continuing strong rebound. NBTY started today. TWLB beat estimate after close. Fundamentals are still the same. All bad news been priced in. PE very decent. They will fly given time.
OSX - they need to reverse down tomorrow or else we are very likely heading higher with the belief that the double bottoms had been in placed. |
