A few weeks ago when volatility was really picking up and the markets were falling it seemed like many people were calling for a short term bounce in which they wanted to establish short positions. Well now that we’ve bounced over the holidays it doesn’t seem that traders have held onto that bearish bias. In fact, my twitter stream seems to be loaded with bullish traders or those who are bearish but afraid to commit to any positions. And then there are those Apple traders who feel that stock is going back to $650+ which in fact would propel the general markets higher if that were to happen. So if your bullish on Apple you’re essentially bullish on the general markets. In other words, if it’s unfathomable for Apple to fall then you don’t believe the markets are going to fall, which gives you a bullish bias by default.

I remember at the bottom I felt the markets would bounce as well and was a little worried because so many shared my view of shorting the bounce. But now that the bounce is here it seems that very few are shorting it which gives me a more confidence that the markets have hit a short term top.

4 Responses to “Where Are The Bears?”

  1. Admiring Guest Says:

    Jeff, great work as usual. I haven’t posted in many, many months, but I wanted to add a comment to this post to say that this is the best short setup I’ve seen in this market all year. Only 4% from the year’s highs, internals much worse, potential market headwinds much worse, technical setup very favorable, and sentiment quite bullish.

    I’m in agreement with you, shortest positioning I’ve had all year. If it’s wrong, so be it, but this is a fat pitch to swing at.

  2. soolebop Says:

    they’re around, they’re in names like $GMCR with an almost 40% short float. the comment by Admired guest makes sense but there’s too much potential that a change in the tax code could reap benefits for companies namely multinationals with huge overseas cash hoards. Add to that the real possibility that the US addresses the debt trajectory and you have more upside risk than downside risk i think… Nice post! thanks for sharing..

  3. Hypnos Says:

    I think every highly profitable setup tests your resolve — you have to beat the market.

Leave a Reply