ST outlook

Markets are very ST oversold here and so a bounce is certaintly warrented but I want to see more signs of dumb money traders i.e. rydex and option traders pressing the downside. There's too much complaceny still with these guys. Also, we need to see market leadership via the tech sector re-establish itself and better market action i.e. strong action in the last half hour of the day, not weak action which is what we have been seeing. Weak market action suggests smart money selling and therefore is bearish.

Bottom line: go ahead and try to play the bounce if you wish but keep a tight leash on positions. It's likely either some sort of base building or lower lows will be required before the bulls make another charge for new YTD highs.

If however, we continue to see the action that we've been seeing i.e. relative tech weakness and the market selling off into the close that would be bearish and would argue for a larger downside move.

Right now I continue to focus my time on scanning for individual small/micro cap stocks that are showing great chart patterns and minimal correlation to the broad markets. During the meltdown last year a lot of good companies were slaughtered along with the bad ones and so I think now if you can identify these good companies and sectors you will come out on top regardless of the wiggles in the markets and so long as there no systematic meltdown type scares like we saw last year at this time.

I will also be trying some intraday trading but I'm keeping it small untill I see a better edge.

I mentioned before in the past that short candidates to consider were RIMM, POT and CYOU. It took a while but all 3 have been shot down with the first 2 missing earnings expectations. The latter, CYOU, hasn't as of yet but the lock up period ended Sept 30 and so now insiders can dump their cheap shares at will.