Strong short trades make much more sense in these market conditions. Strong short trades have already been identified, usually with bearish best friend signals or bearish kicker signals. The Dow has had 11 positive trading days in a row. The Japanese rice traders have observed that eight positive trading days will usually produce a high probability of a profit-taking reversal. The market conditions in the Dow may be buying the rumor/selling the news based upon the feds, likely to increase interest rates by another quarter percent. Although the Dow has been moving positive, the S&P 500 has traded relatively flat, and the NASDAQ is demonstrating bearish signals. When the probability of a reversal in the markets increases, adding more long positions becomes less enticing. However, short solid trades have the benefit of the signals themselves producing good probabilities of more downside, which would now be enhanced if selling starts forming in all the indexes. This is merely simple logic utilizing the expected results of what human nature is likely to do when trends get overextended
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Good Investing,
Stephen Bigalow
