Stealth Bear

7 09 2009

I did my usual routine yesterday, going through all my charts. I found 100 new opportunities, but it is still decidedly lop-sided. 73 of them are bearish, and 27 of them are bullish. And, I’ve got to say, the bearish ones tend to be large, widely-traded outfits whereas the bullish ones are these weird little firms no one has ever heard of. So, frankly, I’m not sure what components of the indexes keep finding the strength to rise. The real strength is in all the lame, scummy stocks – – not the quality end of the spectrum.

I did notice that there are several instances of sectors that Slopers were trying to short for a long time and, finally, just gave up on in disgust. The “casual dining” sector is a perfect example of this. Some here will remember how during the Spring we kept trying to short the likes of DIN, EAT, and other eating establishments, all while the stocks kept exploding higher. (The basic theory was that people were depressed about the state of things and wanted to shove low-cost, high-calorie food into their mouths; why else would anyone elect to go to a place like the International House of Pancakes?)

The funny thing is that, after people gave up on them, they did indeed start to fall. In fact, they peaked way back in April! Just take a look at this one:

0906-din

The graph may not look that dramatic, but the stock lost 43% of its value over the past four months. That’s the kind of “performance” I’d like to see from my shorts.

The point is that the vast majority of my shorts and my potential shorts look exactly like this stock did in April. What’s agonizing and frustrating is waiting for the damned things to actually break.

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