{"id":24487,"date":"2011-10-16T17:03:27","date_gmt":"2011-10-16T21:03:27","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2011\/10\/16\/have-the-bears-taken-over\/"},"modified":"2011-10-16T17:03:27","modified_gmt":"2011-10-16T21:03:27","slug":"have-the-bears-taken-over","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/10\/16\/have-the-bears-taken-over\/","title":{"rendered":"Have the Bears Taken Over?"},"content":{"rendered":"

By MoneyMorning.com.au<\/strong><\/p>\n

‘I have a feeling we are going to see lower prices before you could call the low of the bear market.’<\/em>
\nSlipstream Trader<\/em>, Murray Dawes 7 October 2011<\/div>\n

 <\/p>\n

Is Murray right?<\/p>\n

Could be. A leading bearish indicator – we’ll show you in a minute – has reached a five year peak. When bearish indicators peak it suggests stocks could be heading for a fall.<\/p>\n

This shouldn’t come as a surprise.<\/span><\/p>\n

Since the April highs of this year, the Dow Jones Industrial Average has lost more than 6%. The S&P 500 is 8% worse off. And the S&P\/ASX 200 is down more than 11%.<\/p>\n

Data compiled for Bloomberg News<\/em> showed ‘borrowed shares’ rose to 11.6% in September, almost 2% higher than July.<\/p>\n

This is important because in order for short sellers to short sell, they must first borrow the shares. So knowing the amount of borrowed shares gives a good guide to how much stock is being short sold.<\/p>\n

That should be enough to alarm the bulls. Because the larger the amount of short selling, the more ‘bearish’ the market outlook.<\/p>\n

To put it in perspective, the 2% increase in short selling is the biggest increase since 2006. Bloomberg’s report found ‘US short sales are rising at the second-fastest pace on record after the 2008 financial crisis.’<\/em><\/p>\n

And according to the New York Stock Exchange, short selling has jumped from 3.5% in July to 4.1%.<\/p>\n

<\/p>\n

Some analysts don’t know which way to look<\/div>\n

<\/strong>
\nSo, which way is the market headed?<\/p>\n

Filippo Garbarino, a managing director at Frontwave Capital says, ‘The market is so undervalued right now, it’s kind of hard to take a short position. But at the same time given the economy, it is hard to be long’<\/em>.<\/p>\n

And then there’s this from Eden Chen, at Lightmark Capital, ‘It’s very difficult to say with certainty whether being long or short right now is a good idea because things can quickly change.’<\/em><\/p>\n

In other words, they don’t know!<\/p>\n

Anyone can see the market is trending down. But what you want to know is what you should do about it?<\/p>\n

<\/p>\n

Using the technical information<\/div>\n

<\/strong>
\nTechnical analyst, Murray Dawes, has been wary of the lack of market direction.<\/p>\n

When discussing the technical aspects of the S&P 500, in his free weekly market update<\/a>, Murray warned that if ‘…there’s a quick sell off from back under the 10-day moving average… we can get bearish again. But right now the market is holding well up above that 10-day moving average, it’s in a short-term uptrend.’<\/em><\/p>\n

He added, ‘A move back under… 1230, that would be the area that I’m looking to enter with my short [trades]. That would be the perfect trading opportunity. Where we are right now is a bit of no man’s land.’<\/em><\/p>\n

As for the ASX200, he says it could move higher. But don’t expect it to last long.<\/p>\n

Murray says:<\/p>\n

‘Last week I was saying that there was a chance that if the market did take off to the upside we could see even a move back up to the 200 moving average which is up around 4450…<\/p>\n

‘[But] we have to be a little wary that the shift in momentum in the last week or two has been quite dramatic. This could carry on for a bit longer before falling over.’<\/em><\/p>\n

In other words, this is a traders’ market… and a volatile market.<\/p>\n

And that means there are plenty of opportunities to trade the market long or short.<\/p>\n

Shae.<\/strong>
\nEditor, Money Weekend<\/em><\/p>\n

P.S. To check out Murray’s latest free weekly market update on YouTube, click here…<\/a><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nHave the Bears Taken Over? <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au ‘I have a feeling we are going to see lower prices before you could call the low of the bear market.’ Slipstream Trader, Murray Dawes 7 October 2011   Is Murray right? Could be. A leading bearish indicator – we’ll show you in a minute – has reached a five year peak. When … <\/p>\n

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