Both bulls and bears are having a tougher time in this market. There really is nothing for either side to really jump on and ride with. Contrary to common logic, most short sellers of tech stocks prefer a bull market to a bear market. In a bear market, rationality is prevalent. In bull markets, everything looks like the next CSCO. Rationality is thrown out the window. It is in this irrational window of opportunity that some of the best shorts are found. You think SKYM would have shot up from $4.75 to $40.75 in a week in a bear market? Short-term shorts are a dime a dozen in good times. None of the short sellers want to tie up their capital in long-term shorts since the bulls ram everything higher. Tremendous small cap pump and dumps are like hits of crack, instant gratification that lasts for only a little while. Then on to the next p&d opportunity to get the next "hit". High turnover, lots of liquidity, and tremendous runs in dubious companies. This is not what's found in a bear market.

A bear market is just a big grind. Things go lower, activity slows, and nobody wants to run up small cap stocks anymore. Short candidates die out, going long is painful, and interest wanes. Everyone starts thinking long-term. For the shorts, instead of getting 30% stock declines in 2 days, it takes 2 months. For the longs, everything just goes lower. This is actually what happened for a couple of brief months between August and October of 1998. By definition terms, it was a bear market, but it was so fleeting that Bill Fleckenstein would laugh in your face if you told him that was a bear market.

During bear markets, the longs are reluctant to sell at depressed prices and the shorts are reluctant to short at depressed prices. Not many people want to buy. The volume dwindles. They become good periods to take long vacations. There is nothing like a shot of illiquidity and market boredom to count off the days till that cruise to the Caymans.