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Strategies & Market Trends : 02 tax loss season;Mother of all buying opportunites? -- Ignore unavailable to you. Want to Upgrade?

To: CapitalistHogg™ who wrote (176)	4/28/2003 5:02:08 PM
From: russwinter	Read Replies (1) \| Respond to of 212

I believe short covering already has been a big part of this rally. When you go back to early March, it was the shorts who got too complacent. Indicators like the Rydex Ursa -Nova (at 15) and put call ratios showed it (over 1.00). The indicator that fooled people on the intensity of the rally was the VIX which never got much above the high 30's. That's what happens when too many speculators start following the same indicator, it doesn't give a good signal (I call it an open line of fire)like it did in July's and October's bear market rallies. You may recall that I called for a rally starting in March (well before the war), but was saying it wasn't really tradable. It was my emphasis on the VIX, that made me miss (versus the good clean shot I got off on the July and October pops) the intensity of this rally. I got back in a bit too soon on my "credit mania" shorts as well. The early March indicators did allow me to cover my prior shorts at an opportune time however. As for right now, I don't think there's much left on the upside, and the downside momentum could develop quickly. Even if VIX has lost some of it's predictive power, it's still a very low 22, signaling big time complacency. Rydex is well over 32, PC #'s are little erratic. The money flows and MACD are diverging bearishly. I'd say right now I have about 75% bearish conviction.