Wednesday, February 13, 2008

What I See After Doing My Scans

After going through my Telechart scans and checking a few websites, I noticed three things that have me thinking twice of my current bearish outlook. They are as follows:

#1) Investors Intelligence Survey - I checked this after the close today and for the first time in a long time, the bears(35.6%) are almost outnumbering the bulls(36.7%). This is very close to crossing over and if this happens, it will be very bullish for the overall market. Even with the numbers being this close, I take it as bullish. When we were going down in January, the bulls were actually increasing, but now that we are rallying, the bulls are decreasing. There is no argument that this is bullish.

#2) Market Monitor Numbers - I use similar scans to the ones used by Pradeep Bonde at Stockbee and according to my numbers after the close today, we are getting very close to changing from a bearish ratio to a bullish ratio on the number of stocks up 25% in the last 65 days. This happened in December or January also I believe, but lasted for only day before turning negative again, so it is not a guarantee. It is, however, very helpful in determining the overall trend and if it does turn and stay positive, then I believe that is important and cannot be ignored.

#3) Quality of Charts in My Scans - For the first day in a long while, I actually added a significant number of charts into my main watchlist as possible buys, probably a total of 20 or so. Most of these charts are showing green BOP and are setting up nicely for entry if they breakout in the next few days. The main reason I have been bearish for the past few weeks is due to the severe lack of good charts setting up. Based on today, perhaps things are starting to change.

Overall, I am more bullish now than I was around 4:00 PM today. I don't expect to go out and immediately cover my shorts tomorrow and enter a bunch of longs, but I am going to keep my eyes on the long side of the market much more than I have recently and not strictly play shorts. I still will watch some shorts - basically I am going to look at both sides of the market and keep my mind open. I am still concerned by the lack of volume today, but I looked at the volume in July 2007 and it was non-existent as well after the big drop then. The market still went higher. I am really interested to see what IBD says tonight - if they pronounce this a follow-through day, then I will lean even more to the bullish side. I don't know if they will.

Here are some longs I am now watching for entry:

CREE, YTEC, VCGH, EMKR, INFA, DVN, FUQI, SVNT, TXCO, SDTH, TITN

Now that I have began to turn more bullish, you can likely go out and short as much as you want - I'm sure we'll be down big now that my viewpoint has changed. Good luck.

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