Bear Graveyard (a.k.a. the NQ) 8/20/2020
NQ at the daily view.
That bounce this morning was pretty predictable.
1) Liquidity is still high enough to hide a submarine in.
2) The bears were showing a lot of desperation on trading forums yesterday.
3) The stocks that have the highest short interest are among the largest market cap.
nasdaq.com/market-activity/quotes/short-interest
That was a recipe for another short covering rally. That's why I was getting annoyed when I saw permabears asking advice about shorting the NQ. Even after I made it very clear that I would not bother shorting the NQ in these conditions, they read something bearish that was never there... much like how they read the market.
The lesson here? You don't short cult stocks. Cult stocks short you. The markets are like nature. You either adapt to the environment or nature will end you.
That bounce this morning was pretty predictable.
1) Liquidity is still high enough to hide a submarine in.
2) The bears were showing a lot of desperation on trading forums yesterday.
3) The stocks that have the highest short interest are among the largest market cap.
nasdaq.com/market-activity/quotes/short-interest
That was a recipe for another short covering rally. That's why I was getting annoyed when I saw permabears asking advice about shorting the NQ. Even after I made it very clear that I would not bother shorting the NQ in these conditions, they read something bearish that was never there... much like how they read the market.
The lesson here? You don't short cult stocks. Cult stocks short you. The markets are like nature. You either adapt to the environment or nature will end you.
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