I don't trade the US markets but in the markets I do trade the absolute perfect setup is to get to that point, then push up to squeeze the weaker shorts out, then go down hard. A fiendishly beautiful trade when it happens (and u spot it setting up). Personal view: I'd be surprised if there was a real crash this year but another savage dip would be fun.
I agree, that's very possible. However that usually happens when there is excessive bullishness, not bearishness. In fact, those scenarios played out perfectly in GOOG, TASR, ROOM, even AAPL. I have not seen that happen when everyone is very bearish. Let me explain why, when everyone is bearish, they usually hedge to some degree. Therefore, they don't care if the market drops, no forced selling. You have to catch them with their pants down, when everyone feels safe and more importantly when the forward outlook looks to be improving, not getting worse. The only way I can see any kind of hard selloff with follow through is if we convincingly broke out to new highs. And I'm not talking like for a day, but really broke through. Then and only then do I think we see some hard selling. Just one man's opinion.
This is an interesting info and outlook but my past experience with individual stocks with high short interest tells me that I have to be a lot more analytical to expect any contrarian opportunity on a situation like this. Even if the whole world is indeed short, if there are no whales willing to squeeze them out, where would we go but down?
I see, but the better question is: "up or down in the next 4 mo". There's been like what, 10 DAYS of crashes in the last 100 YEARS? Predicting one in a 4 month time frame is pretty slim. Actually, out of curiousity anyone know exactly how many crashes has there been since the inception of the US markets?
A 20% decline over a few months is hardly a "crash." Nor is it historic. In fact NDX (the Nazdick 100 Index) had declined 17.8% THIS YEAR when it was on it's July lows! Back in the 60's, 70's and early 80's the Dow would have 20% (or greater) declines virtually yearly.
To share my useless CFA information- and possibly be corrected on my misconception (please correct me before Dec): The number of ETF shares are not fixed, i.e. they are created/liquidated according to demand- so my impression is that the "hard to borrow" issue would not be as applicable as individual stocks.
drift. if all the money is short - it takes _very_ little to move up. then what happens? the bloddy massacre of covering ensues........
i would like to know this too - i see no reason why the shares of ETFs would behave any differently then other funds.