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Today Is a Great Day to Go Short

By Jeff Clark
Friday, August 24, 2007

The C wave can be painful. Or, it can be a terrific opportunity...
 
We've already gone over the concept of an A-B-C correction. The A wave is the first move lower. The B wave is the inevitable bounce off of the lows. And the C wave comes back to re-test the lows and perhaps wash out a bit lower.
 
The A wave ended with last Thursday's dramatic decline to 1,371 on the S&P 500.
 
At the high of the day yesterday, the S&P was trading at 1,472. That's a gain of more than 100 points in just one week.
 
That's one heck of a B wave!
 
My original upside target for a bounce was 1,500. We're still more than 30 points away from that. But given the size of the move over the past few days, I'm doubting whether we'll actually get there. It's a case of "too much too soon."
 
And, it may be time to catch the C wave.
 
One index that looks highly vulnerable right now is the Nasdaq 100 (QQQQ). Here's the chart...
 
 
The Nasdaq 100 has rallied right back up to the 50-day moving average line. This is a natural area of resistance and is a logical spot at which to establish an initial short position.
 
No one knows for sure if this bounce has fully run its course and if the market is about to retest the lows of last week. But one thing I do know is that – in this environment – it makes sense to head into the weekend with one or two short positions.
 
And, if we catch the wave at just the right time, we could be hanging ten by Monday.
 
Best regards and good trading,
 
Jeff Clark




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Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%