Friday, November 5, 2010

Atypical Technical Action that is Wrecking Bears

While in awe of some of the 'straight up' moves we are seeing in some stocks, I can at least comprehend them.  Momentum begets momentum, and it does not stop until the music ends and people scramble for chairs.  (that said, some of these moves are "NASDAQ 1999ish" in nature)  But what is bewildering are some of the moves in what would normally be broken down charts.  Action such as we see in Flowserve (FLS) today - I am using this as an example but I have seen many similar things the last month - is totally debilitating if you dare to try to short anything.  Nothing in the chart says a reversal out of the blue like this should happen - a stock that broke down below the 200 day moving average, after a huge gap down - is simply not supposed to reverse like this.  I don't see an analyst upgrade to drive the stock, which would normally be the only reason a move like this would happen.

This is not an indictment of the company, which is a solid venture and one I've held in the past (long).  It simply showcases how this market is virtually impossible for short sellers of any sort.  And how historical patterns have become moot under the liquidity tsunami.  Making a purchase or a short is all about putting odds in your favor, based on historical precedent.... but right now we are back to the environment where someone with 3 hours of market experience can do as well as someone with 30 years.  It is an abnormal market.

No position


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