Dan Fitzpatrick
The current market continues to confound the bears. When the market is in full-blown "buy" mode, it rarely pays to stand in its way, and it's important for traders to understand that short-selling is betting against the natural upward bias of the market.
Why is there an upward bias? There are two reasons: First, the majority of money managers are "long only." They do not short stocks. Neither do most private traders. As such, most traders are predisposed to look for stocks to buy, not to sell. Second, businesses are in business to make money. Yes, a new business venture will often lose money during its maturation process as it works to gain market share, develop new products and build customer loyalty. But over time, the business will begin paying for itself, with money left over for the owners and investors in the business. Knowing why stocks generally go up enables us to understand what factors will make them go down. What happens when you own an established business that has been around for decades, but that business is consistently losing money? Moreover, the industry the business is in is on the decline, and so the industry itself is not doing well. When you're in that situation, you look to sell your business for whatever you can -- even if it means taking less money than you paid for it. That brings us to the New York Times(NYT Quote - Cramer on NYT - Stock Picks). Print media is rapidly falling by the wayside, as evidenced by the fact you are reading this on your monitor. The New York Times Co. has been around for more than 100 years, but its earnings aren't exactly stellar. Neither is its chart (below). Let's take a look. You can see the volatility in this chart. But the one consistency seems to be the rising support trend line, which is currently at around $22.50. The Relative Strength Index (RSI), a momentum indicator, is in the middle of its channel, reflecting the ambiguous price action. (Remember, the RSI ranges from 0 to 100. A level around 70 or above indicates a stock may be overbought, and 30 or below indicates it may be oversold.) Money flow, which shows a series of lower highs and lower lows, gives us a better look at the stock. This indicates that, on balance, money is flowing out of this stock.| New York Times (NYT) -- Daily |
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