Friday, October 21, 2005


The Big Picture shares a glimpse of the short interest ratio vs. the S&P 500 Take a look!

The chart shows that the shorts are starting to cover, thus putting upward pressure on the price of stocks. With oil dropping and the FOMC near the end of a long tightening round, what is not to like? The market is poised for take off. I used the words take off because CAL, AMR and LCC should do well as the price of airline fuel declines.

Some say that the refining bottle neck will not go away soon. I say if the price of crude continues to fall and the crack spread stays the same then the price of aviation fuel will fall. Furthermore, the crack spread will eventually narrow as refining capacity makes it back on line.

The evidence suggest that the shorts own oil stocks and are shorting other areas. Therefore they are getting pounded in both directions. These guys are facing a tough choice, to sell their oil stocks or cover their shorts. It appears that some folks are doing both. GO BULL!