I believe we're going higher, and maybe even experience a melt-up into the new year. However, Bubblevision (CNBC) reported this afternoon that short interest on the NYSE had dropped this week by the largest amount in over a decade. This makes me wonder if this rally is being fueled by short covering more than real buying. Like I said, I think we're moving higher, but it does make me wonder.
small specs are also getting mighty long on the COTs. Add to that the short implosion characteristics you mentioned. Stuff like that gives me concern. There's definitely potential for one more washout before a continued run. But, the extreme sentiment on the last drop sure does seem to portend continued upside IMO. Also, looking back on recent NYSE short interest, it spiked down like that twice -- 1) Right before continued run late 03 2) (Gasp) Top of 2000 Shows how ambiguous this can be.
I agree. It's funny but one often here's about "asset targeting" in regard to the Fed but this was really short targeting. Clearly the timing of the discount rate cut was motivated by opex and while the Fed couldn't help that their meeting was scheduled the week of quadruple witching, I can't help but think that they're aware that blowing up a few serial short sellers is as good a method as any when inducing a low volume ramp.
Me thinks it's time to get short. Watching the 10 yr for a signal, but I think if/when the spoo gets to the old highs of 1551-53 we fail and down she goes. Shorts got kicked in the balls, but the breadth is not exactly screaming buy right now. Silly technicals, what do they know, this time its different right?
All the vol indices, which I'm looking very closely at now, are way down from recent highs. Too far too fast. I think next week is down across the board. If I had to guess, I'd say it'll probably be said to be down (in the press) due to the dollar drop and the rise in oil and gold, especially if the latter two break decisively to the upside.
Of course this is just light volume short covering, I am staying short 200% in all my accounts. No stops needed, this market is done and will shed 80% till Spring 2008. Risk free $$$ just gotta have the balls to collect it.
I'm not long (or short), but it doesn't bode well for a short position when the fed states, in no uncertain terms, that they will cut as needed. They won't let this market drop. There probably will be another short opportunity in the future - but staying short right now is VERY risky....
It's safe to take a short at these levels. It's simple. Stop above the high and then look for new ground if you get stopped out. If we make new highs, they will not be artificial. There's obviously no reason to push this market to new highs without expecting more. Trade the dollar and the treasury yield increase until we get inflation data at the end of the week.