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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (53494)	7/28/2001 2:59:52 PM
From: robert b furman	Read Replies (2) \| Respond to of 94695

Hi Bill, Interesting article in Investor's Business Daily: NASDAQ SHORT INTEREST HITS A HIGH IN JULY AS TECHS SLIDE. The nasdaq says short interest rose to a record 4.01 billion shares this month from 3.82 Billion for June. That represents 2.36 days average daily Nasdaq volume vs. 2.19 days in June. I view this as a red flag for shorts much like record margin is a flag for bulls at market tops. 2.36 days of short covering is certainly enough to raise the current consolidation to a new heighth.Especially considering how close the dull low volume trading has the major averages to what should be considered a breakout level. All of the major averages have been declining in a descending wedge (which generally is perceived as a bullish pattern). The dow has already broken out of the descending wedge's upper trendline(without having to retest it's July lows.The dow's 50 day simple moving average is 10,714 - friday's close is at 10417. The S&P alsohas already broken thru its descending wedge's upper trendline - but tested and confirmed the July lows. The spx's 50 day sma is 1235 - friday's close is at 1205.82 The ndx is the laggard and has yet to pop up thru the upper trendline of it's descending wedge (1725) friday's close is at 1683.18.The 50 day sma of ndx.x is 1789.145.Since the major bubble action of 2000 resided in the ndx - it's laggard status is to be anticipated. The NAZ mirrors the ndx.x with a 50 day sma of 2105.356.The Naz closed friday at 2029.07 The point of this exercise is, to show how extremely close these markets are to breaking out of a generally bullish pattern. To futher the explosive potential of all the major markets,is the close proximity of friday's close to the markets respective 50 day simple moving averages. I reference this average as it is often used as a yardstick by many investors.Certainly if/when all or some of the major averages breakout above their 50 day moving average - a day of reckoning will at least partially be made by a record level of short sellers. If average to low volume gets us close to this breakout level, then heaven help those standing in the door as the shorts decide they've been made victims of their own greed.Much like bulls come out of the ether after an expired top- it's really the same thing. That is just another way of saying: fear will enter mindsets of the shorts - "get me out at any price just get me out" as they scurry to salvage what should be huge gains but I suspect is closer to the truth to say cut their losses.Remember the short interest record came at the bottom not the top of the market averages.This should result in a much weaker group of shorts that will head for the door in lemming like fashion.hehehe By then Joe 6 pack is gonna get a vision that it's time to go long - "the market is back baby!". I'm not expecting a big reversal and blow off top here but this last consolidation has done so well, that I think squeezing out the shorts could get us up one more step to a higher consolidation. That's good enough for me - and then we'll all climb the wall of worrying about the retest. Sooner or later - (and it's getting to be later quickly now), the lag effects of cheap money will kick in.Then we will talk growth and the attitude worm will have turned.JMHO All those shorts are living on hope - the only commodity MR. market will give you - when you short the market at a bottom. JMHO Bob