Since I originally started a thread on the red flags missed by shorts on July 15, there has been three new all time highs reached on the futures (Wednesday, Thursday and Friday). Add those three red flags for anyone that is still short. Lets recap where we are right now:
Bouncing Off Of 100 DMA (June 25)
Breaking Through 20 DMA (July 5)
Breaking Through 50 DMA (July 5)
New High #1 (July 17)
New High #2 (July 18)
New High #3 (July 19)
What I find curious is that of all of the 6 read flags that the shorts have gotten (so far), the only one where there was any substantial short covering was new high #3 which happened this Friday. To me, the more logical places to cover would have been the bouncing off of the 100 DMA, the breaking of the 50 DMA and new high #1. I wonder what is so important/special for the shorts in creating new high #3 (margin calls?). Waiting so long to start covering has really put the shorts (as a group) in a very vulnerable position. Let me give the shorts a very sobering statistic (even though you guys hate numbers), the amount of net buying on this rally that started on June 25 represents only 22% of the amount of net selling that occurred during the sell off that started on May 22. This statistic should give the remaining shorts an idea of the amount of buying that it will take to put in a top. That is one of the reasons I am thinking we will see at least 1750 before a top is actually put in.
P.S. The last installment of the "red flag thread" got 1 thumbs up and 7 thumbs down. What is up with that? This board has some of the strangest people I have every come in contact with. The more informative/accurate your predictions/posts are, the more people hate you. I am starting to think that 75% of the posters on this board are boiler room employees who get paid to harass/discourage the smart/honest posters and to post disinformation. I have always had my suspicions that IBDMan is a boiler room poster. No person can be that wrong so consistently.
You can add two more red flags to the growing list:
New High #4 (July 22)
New High #5 (July 23)
It has to be getting downright embarrassing to continue to be short through 8 bullish red flags. Do what you always do, give me a few more thumbs down and then stick your head right back into the sand once that is done.
What makes you think ANY "shorts" missed anything and what makes you think you are somehow special, pointing out things that happend weeks ago? The way it normally works is SHORTS are the first to recognize technical support(it was 6/24 - not 6/25) and their short covering and PROFIT TAKING is what starts off a rally. Longs generally need to wait, especially if it was their stop-losses that took us down to begin with. They come in later when they feel better. My guess is many longs didn't feel good about getting back in until the 7/11 close and there hasn't been much of the way of gains since.
What's the point in trying to conclude after the fact what someone else may or may not have been thinking? Labeling people who move the markets as either "shorts" or "longs" as if they have some separate philosphy, is just argumentative and subjective. No sense in mixing the correct MA support levels with longs or shorts.
bunch of futures shorts covered lately.
And that's usually a sign of things to turn around. With volume way down, I suspect that buyers are mutual funds. Smart money is long gone. And once more shorts cover, the balance is going to tip, pretty fast I'm afraid.
The balance of power, if you will, is still strongly in the hands of the longs. We will need three or four more days like last Friday to tip the power to the shorts. By then the market will probably be at 1750 or above. Shorts are in a very vulnerable position right now and smart bulls know it. The best thing that shorts can do (as a group) is to cover as fast as possible, wait for a top and then re-short. However, the shorts (as a group) seen to be less sophisticated and organized as the longs which is why they always seem to get the s*** kicked out of them.