When patterns break, the shorts break with them.
Three of the best shorts out there for months were the oils, Home Depot (HD - Get Report) and Micron Technologies, Inc. (MU - Get Report) . The former were all about glut. Home Depot's short appeal was all about an Amazon.com, Inc. (AMZN - Get Report) -induced peak, with appliances leading the way. No matter what oil company reported a good number, they were all slaughtered, with the only turn being with Cimarex (XEC - Get Report) which reported higher production with lower costs. Given that none other demonstrated that kind of turn, they were all hammered.
Home Depot came about as a short after a blowout quarter that failed to bring any follow-through followed by a weak Lowe's (LOW - Get Report) number and the realization that Amazon was really gunning for it. Micron delivered two amazing quarters but broke down after each one as the bears circled, judging that we are at a peak cycle.
Now we have the Home Depot cycle broken because of Florida demand on top of Houston demand. The oils are similarly rallying as the start-up in refineries leads to a larger drop in oil supplies. Micron can't easily be explained except for the fact that the big users of DRAMs have stated they expect no real price break.
So all three fabulous shorts are now bedeviling the bears.
- Home Depot and Lowe's Brace for Hurricane Irma Impact
- Apple's iPhone 8 Is Helping Boost Micron and Other Memory Makers -- for Now
- What Devastating Flooding From Hurricane Harvey Means for Oil Prices
If Home Depot and Micron take out their highs, I predict a big wave of analyst pushes. If oil can get through $50 -- tall order -- I think we will see another short squeeze. Gas prices are rising, too.
Meanwhile, North Korea again seems like it is "under control," whatever that means, given that it is unlikely that an oil embargo will work because of a lack of leverage with "our friends" the Chinese. Still, it's all systems go for some of these bear markets and that takes the pressure off a lot of other sectors.
Random musings: I am filing sporadically in order to spend time with my family.
This article originally appeared Sept. 6 at 2:59 PM ET on Real Money, our premium site for active traders. Click here to get great columns like this from Jim Cramer and other writers even earlier in the trading day.