Saturday, November 04, 2006

Everyone's afraid to be a bear

The market has been consolidating lately and everyone is afraid to be a bear right now, and who can blame them with the way the market has slapped bears on the paw every time they venture out of the den over the last 3 months.

I don't know what's going to happen in the market tomorrow, next week, or next year... but I do know that one of these days/weeks/years the bears will win one of these stand off's... and why not now? Hmmm let's see... because of performance anxiety of those who have been waiting with their money on the sideline? Now they're going to jump in and drive the market further up with fresh capital... or will they be the suckers buying at the top, only to be exasperated by the sudden market push up to new highs after they decide to cut their losses and sell.

Dr. Joe is a rather entertaining chartist that I check out from time to time. My favorite chart that he posts is the weekly $NASI, which is a summation index of the NASDAQ stocks reaching new highs. Here's his view: (click on the image to enlarge)

The way I'm looking at this is that we're due for the bears to win a round... maybe not a big win... maybe just an interim win before a big push up to new highs... but I don't think the folks hoping for an immediate big push up in the market are going to be rewarded this week.

There are several other technical indicators of this, but really the most obvious signal of all to me is that everyone is afraid to be a bear right now.

Thus here are some stocks on my watch list with an eye towards shorting (in addition to the short position I'm holding in BSC from last week:



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