Get Short?.. Or Get Shortie??

It's DECIDED.. the new Bull(sh*t) Market has arrived!!

The shorts took it in the shorts anticipating a Friday afternoon sell-off (myself included).. The longs just continued to paint the tape higher and higher attempting to trigger "buy stops" that that shorts had entered to protect their positions.

But where's the volume??!!! We can't have a TRUE Bull market without a serious volume that indicates major institutional buying and it seems the higher this market rallies, the lower the volume goes.

Here's the most recent PSA video for your entertainment and education. I think he makes a great point about this lack of volume:

July 9th PSA market read: Get Short!

That's REEKS of stealth selling, and reflects that Mutual Fund managers are fully invested, lacking cash, and selling to meet investor redemptions. Again, this has been the case ever since the "Flash Crash" of May 6th removed 10% of the Dow's market value within minutes. This apparently convinced investors that "cash/bonds are king" and led to 9 straight weeks of redemptions, which are only now decreasing in size.

Investors pull $12 Billion out of the stock market in June

And ponder this article that just came out in USAToday, which is WIDELY READ (at least at hotels... ;0)

Trading against the Computers

Pretty frightening to realize that computers can "paint the tape" (which is illegal) in such a way to make it seem that there is actually interest from retail and institutional investors. They just want to suck you in and then slam the market down, leaving the average investor foundering in losses.

But it's not just the retail investor (Joe Six Pack) that is pulling out of the markets. Even the major Hedge Funds are seeing BILLIONS in redemptions from their "smart money" clients.

John Paulson, who made $3 Billion after working with Goldman Sachs to manipulate the Sub-Prime and Credit Default Swap markets just saw $2 Billion in redemptions from his clients.

Big Money pulling out of Hedge Funds.

Now.. if John Paulson and other Hedge Fund managers can't make money in this market, DESPITE being able to go both short and long at the same time (Mutual Funds can only "Go Long", while "Hedgies" can do anything and do it secretly), what makes the average investor think they can?

It's why I day trade, or at most, swing trade.. Everyone is getting whip-sawed as we wait for the market to choose it's ultimate direction, whether higher or lower. So they sit and wait.

So we rallied 500 points on the Dow last week, but positive buying volume on Friday was the worst we've seen since April:

DOW Weekly Chart

See the positive volume spike we saw in March, 2009? THAT'S what we need to be seeing, or at least seeing INCREASING positive volume, not declining volume. It's a sign that the market is lacking conviction and that "Big Money" investors are de-leveraging, and sitting on the equity market sidelines.

Does that mean the market can't go higher? Sure it can, but it will be fed by short-sellers covering and closing out their positions, not REAL DEMAND from bullish investors.

Thus, the signs are clear this is a "Bull(sh*t) Market rally (for now).