Wednesday, May 7, 2008

Intraday Update: Contrarian Indicators Matter, Go Long


Commandment #8 addresses the beauty and effectiveness of our free market system: there are two sides to every trade, long and short, so take advantage of it. The Dow Jones news wires reported today that short interest on the New York Stock Exchange (NYSE) rose by 750,000 shares between April 15th and April 30th to 15.63M. The percentage of total shares short now stands at 4.1%. Here is a detailed list of short positions on the NYSE.

http://online.wsj.com/mdc/public/page/2_3030-shortint_hi_nyse-NYSE.html?mod=topnav_2_3000

As the S&P 500 Index steadies above the 1,400 level, those bears who hold the 15.63M shares short will feel greater pressure to cover. Remember, every short sale must be bought back eventually, therefore the term "dead cat bounce" even in worthless stocks that go as far as declaring bankruptcy. Please vote in our poll whether you feel the 1,400 level on the S&P will hold by Friday's close, as this rising contrarian indicator bodes well for bulls; let the stampede begin?

The Psychology of the Call team.

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