Short Selling, Dark Side, Bubble Busting Laboratory Message Board

To: russwinter who wrote (357)	11/2/2006 8:45:29 AM
From: Rarebird	Read Replies (1) of 361

Market Fragments: Time to Sell the Rallies: The Dow is approaching a support area, which will likely provide an excuse for a rally. Such a rally would be a low risk area to sell short. The Russell 2000 broke down yesterday. What makes the ^RUT (and NDX) great short selling opportunities on rallies is that money is still flowing into them. I interpret that money flow as bearish because it is likely to be the last of the old bears buying the dip trying to recapture some of the money they lost selling the market all the way up the hill. Dip buyers project current earnings into the future and decide to buy because they see an increasing stream of future earnings for stocks. Unfortunately, by a number of measures (including ratio of earnings to GDP), stocks are very richly priced if those earnings fall next year, as S&P Corp is projecting to happen. Bottom line: A great bounce to sell short is coming.