Tuesday, March 3, 2009


Many have been hyping healthcare as the safe haven in these times of trouble. While everyone is selling off stocks like there is no tomorrow because they can't determine the E in the P/E ratio---we have analyst suggesting that we put money into a sector where the revenues are suspect at best. I have chosen to short EMS and the trade is working nicely so far. I started looking at the fundamentals of the company and just couldn't see why analyst were so impressed. I think the company is well run, they just have the uncertainty of ever-changing government reimbursement and the ever-high potential of litigation. Technically, I like this as a short as well. My first target is $26.48 where I plan to cover half with a trailing stop for the rest with an ultimate goal of 22.15.

This market wants to rally, but everytime we show even a little strength we see people rush to the exits. I see no fundamental or technical reason for these markets to rise right here. I saw a graphic showing how much wealth has literally evaporated over the last year. It is absolutely MIND BOGGLING. I do not buy healthcare as a safe haven. As a matter of fact, I look for healthcare to underperform as we hear more "healthcare reform" rhetoric. I think this sector could be more jittery over the next two months than the overall market--and that is saying something.

There is one thing that is on my mind right here. So many are bearish, we could get a very surprising rally---not because of fundamentals---nor technicals---just because no one upon no one really expects it. If that happens, I will plan to short more. As a fundamental guy, I use to hate the term "listen to the markets". Now is a time to listen to the markets and be very careful.
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