Never Short a Dull Market

Yesterday we mentioned a line in the sand where bulls had to make their stand with the QQQQ. Window dressers didn't show up once again and the QQQQ wasn't able to hold support. We don't wish to be ultra stubborn with our bullish stand here but even though the situation looks dire for the bulls there is something that needs to be considered. Going back to last month recall that window dressers did show up until the first day of December, or the third day into the traditional window. On December 1 the market gapped up and continued to run for several days after discouraged traders denied end of the month buying washed out November 29th and 30th. Consider that the market is very oversold here, that there have been no real distribution days aside from December 8, and the fact that end of the month buyers could potentially be waiting for market sentiment to turn a bit more bearish before they step in. Now if a series of real short set ups start showing up in our scans we will rethink our theory here but right now we think there is still potential for a sharp reversal. We hope that subscribers can see why we have hesitated to put money to work in the market as we wait for the market to make its move. The best immediate term indicator we have at our disposal is the health of our daily scans. All week scans have been telling us that buyers are just not stepping in yet. On the other side of the coin, they have not indicated that distribution has been taking place either. A few smart rules to live by: Don't short a boring market, don't short an oversold market if selling is occurring on light volume, and finally, don't short into the end of the month.