Securities Research Services

Monday, July 23, 2007

Bearish Sentiment Should Lead to Rally

Options traders shorted the S&P 500 by a 3-1 margin on Friday. They shorted the QQQQ by 9-1. Short positions like this mean that we are close to a rally. Today may see some indecision, but we are looking for the market to find support and move back up early this week.

When so many are betting on downside, the only place the market has to go is up. The trend remains up, so it only makes sense to look for a resumption of the trend. Betting on a top is a fools game that most lose.

1 comment:

Anonymous said...

A major caution sign however, is that wrong way Bob Carver tossed his grim reaper suit this weekend and now thinks the rally may be for real.