Market Bulls Return

bt least temporarily, the market, as expected, had a "dead cat bounce" on lower volume today. Much of today's action is due to the fact that many shorts covered their positions, adding fuel to the fire. The put to call ratio leading up to today was 1.45, a very high number. The market remains technically broken and any upside move, even strong moves on lower volumes must be shorted, but I do not believe tomorrow is the top. If you should want to play the market, the best position is to take the contrarian position at extreme movements in stock prices. I do not think that the underlying fundamentals of this market and the global market is sound. I believe we are in a sick market and the real pain will start after the excess bullishness and froth has been wiped out. Judging by today's action, the bullish sentiment still prevails which bodes well for establishing further short trade.

Baidu and Google both broke to the upside in spectacular fashion, especially for Google, as the longs who bought the weakness got rewarded. As I said before, "buy the weakness and sell the strength". This is a highly volatile market place, and the sooner you get nimble and readjust your thinking, the sooner you can make money.

-By Thursday, I will be adding to BIDU and GOOG shorts with put options. Google should test $465 to $470, where there will be an excellent short opportunity. BIDU should test the $110 level, though I do not think it will breach that mark, which will make a good short entry for the down leg, which hopefully will test the 200 DMA at $93.

The bulls will enjoy one more day of gloating and the shorts will have to endure at least one more day of pain. Cheers!