DEAD CAT BOUNCE CONFIRMED

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.

DOWNSIDE DAY

Nice downside we had today. Markets sucked if you were on the longside the whole of today. But in my case I am 50% long and 100% short so math question of the day. What is the total net sum of my positions ? 50% Short . Yep short as I like to be. I am getting sick of Google jumping around. A great GOOG play is buying September put options. They move around alot . Look for GOOG to score a 70+ on the hourly RSI and buy some Puts or atleast thats what I enjoy doing. Talking about POS, will you take a look at HANS. Made a 52 week high on the weakest volume last week and its been downhill since than. I keep trading in and out of my HANS short positions using RSI as my guide . Looking at GOOG and HANS they are both trading near the upper ends of their Bollinger bands and I would look for a move towards the middle of the band or even the lower end in the coming weeks.

Now to move on to a bullish picture . Even in these bearish times its nice to keep an eye on stocks making new highs on huge volume. Take a look at MEA. Its been spiralling upwards on way above normal volume. Interesting stock to keep an eye on. Might be overextended with the Bollinger bands and all but would not be surprised at further upside.

WHAT TO EXPECT IN THE COMING WEEKS

The markets have been moving higher as of late though with a substantial decrease in volume. This is telling us that the rally lacks the strength to take us to new highs. The 11,700 on the DOW will be the high for this year. I am expecting the markets to break down in the weeks ahead with an occasional plunge which should take us below 10,000 on the DOW and under 2000 on the Nasdaq. As I write I am seeing increasing sign of a sell off across the board with many leaders showing weakness. I would use this opportunity to add to my short positions particularly in HANS and GOOG.

LOOKING TO TAKE SHORT POSITION IN HANS

Today I am looking to take a short position in HANS. The price movement is showing a fade play i.e the big money is trying to take price back up to 52 week high around $202 and sell off the stock. There was plenty of window dressing on Friday end of close with HANS jumping $5 bucks around 3.55pm with large blocks being traded. Money managers trying to improve the look of their portfolios by acting as if they held the best performing stocks of the quarter. The increases in price over the last two weeks, has come on relatively lower volume and todays volume is not impressive, in comparison to the volume last time around when HANS headed to $200. Added to this, is a stock that is trading at 65x trailing earnings which is extremely high, for a $4.5 billion plus market capitalized company which sells soft and energy drinks - infact one energy drink, Monster which seems to have the market in a spin. Competition is fierce and energy drinks for the most part are a fad which can go either way. Monster may be hot today but, there are no guarantee it will be hot 6 months from now and with ever changing consumer tastes, a one trick pony such as HANS is way overpriced especially taking into account that the markets are setting up for a further drop to the downside.