SSS - Thoughts on the Short Side for Monday, October 24th, 2011
The market continues to press to the upside, so our view is to adhere to stops on any short positions per our prior SSS report emails if you have not already been stopped out. Do not argue with the market, as it could be sensing impending QE(n) coming out of Europe on Wednesday (do they really have any other choice but to print, print, print?). Meanwhile the Fed continues to mouth the possibility of more QE of their own.
Other evidence: The pocket pivot in CMG that we alerted you to last week continues to work well, and the buyable gap-up in ISRG also continues to work, thus there is some evidence that the long side is able to work here. We also note that ISRG is emerging from a long-term base of 18-months duration, thus is may offer "fresh merchandise" for a continued market rally, and it is a "big stock" that institutions can sink their teeth into if they need to deploy cash quickly.
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