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Our research draws its market bias from a combo of Fundamental and Technical evidence. Economic and earning trends are matched against our analysis of price and volume charts, giving us an indication of how friendly or unfriendly the market is behaving. The goal is to identify top growth stocks... More
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  • Runaway Train 4 comments
    Oct 18, 2010 5:48 PM | about stocks: DIA, SPY, QQQ

    Market players everywhere are waiting for a pullback or correction.

    Yes, the market has its way of screwing over the most amount of people as possible. Given the high short interest out there we can't be surprised to see Bears tested as the major indexes continue to ring new highs.

    We're in the camp that believes recent high volume with lack of significant follow through, or grinding, is enough warning to lay low.

    Like a tiger in the jungle, we only want to pounce when we know we'll get our prey. That's why we'll wait as long as it takes to get a broad market pullback, ideally setting us up for long entries in the plethora of recent Growth Stock breakouts.

    Stay tuned,

    Disclosure: flat

    Stocks: DIA, SPY, QQQ
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  • untrusting investor
    , contributor
    Comments (9903) | Send Message
    High short interest??? Not likely, any reports we have seen show short interest at very very low levels and falling.


    The artifical market rally is mainly due to dollar devaluation, POMO operations with the Fed pumping billions weekly to dealers, prop desks, HFT'ers, etc., Fed alleged addtional intervention with QE2, and basically an all-in effort by the Fed to ramp asset prices in any way they can.


    Earnings are OK for many companies, but they are long long ago priced in to equity prices, so fundamentals have almost nothing to do with the equity ramp.
    18 Oct 2010, 10:01 PM Reply Like
  • GSRTrades
    , contributor
    Comments (10) | Send Message
    Author’s reply » No idea what you're talking about:
    19 Oct 2010, 06:32 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9903) | Send Message


    See the attached article. Short interest equals about 3.5% of shares outstanding. Guess if one thinks 3.5% of shares outstanding can significantly make or break a market then imagine what trillions of dollars in QE, POMO operations, and 70% daily trading control by a tiny handful (maybe 15-20 prop desks, large HFT'ers, and algo traders) of mega large traders can do. These make short interest look like a pea in the ocean. Or imagine what a 10% devaluation in the dollar looks like in the international currency markets that totally dwarf the size of the US equity market and even more so when US dollars account for about 70% of currency reserves.


    The reality is neither short interest nor retail investors have virtually anything to do with market direction.


    When short interest gets to maybe 20 or 30% maybe it might have some impact then on market direction. But until then it is pretty unlikely that short interest has virtually anything to do with market direction.
    23 Oct 2010, 12:27 AM Reply Like
  • GSRTrades
    , contributor
    Comments (10) | Send Message
    Author’s reply » While we agree that short interest is usually not a dominant influence to longer term trends, the mostly hedge funds that sell short hold weight when it comes to short-term action. Since your two-month old article was published, more than 600 million more shares were sold short, a significant position to consider under the prospects of those sellers feeling pressure to cover, and certainly not at the "very very low levels" you claim.


    There are three types of money in the market: Institutional, Professional and Retail, with their importance in market direction following that order. Many HFT programs are designed to front run institutional money, which is where our analysis focuses most of its attention. On the other hand, it's the retail money feeding on mainstream news and bad data that keeps us fed.
    23 Oct 2010, 12:51 AM Reply Like
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