Friday, July 21, 2006


Wow. Markets getting ugly huh ? Despite that 200+ point rally we had on the Dow and the great Nasdaq comeback, we are still firmly in a downtrend. Huge rallies occur in bear markets, thats a given when conditions hit deeply oversold, you have shorts who book profits and start covering sending prices higher while bargain hunters jump in to pick up what seems 'undervalued' stocks. Than you have the momentum traders who follow tail and before you know it, a nice rally develops. The thing I love most about big rallies in a bear market is that it gives you the chance to short more stocks. Look for stocks that rally the most but, are still in a downtrend and have rallied to a resistance point be it the 50 or 200 MA or a downtrend line. Than go ahead and short some more. I love this game.

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