Friday, April 15, 2005

The conversation continues

I wanted to keep this part of the conversation on the IBD forum too since I took the time to explain more about my shorting campaign this year... and the campaign is working! Klinv I hope you don't mind me reprinting your side of the conversation.




  • ----------------
    On 4/13/2005 6:01:57 PM KLINV wrote:

    tr0p,
    I appreciate your comments...and agree with you on making the big money at the start of a new trend. I need to remind myself of that...I know it, but in the past week or so, I have put it aside. How do you screen for your shorts? Have you been going by WON's method as he lays out in his short selling book, or do you have a particular method you find successful? If you ever feel like sharing some short possibilities, chime on in on the short selling threads that are going on. One thing that really worries me on shorting ... can I get your input? That is...worrying about shorting a company that ends up getting bought out. One example is ZBRA. Chart looks like a perfect short...but this is one good company...and it could get scooped up. That would suck! Any further points or recommendations appreciated.

    I agree with ninner on the bear market theory. Definitely reads that way to me when viewing what is actually happening and reading WON's books. I hope that the SOB only drags out for a short while (ie: before years end). Oh well...we know what hope is worth...simply another 4 letter word.

    All of you that are not going 100% cash, but wanting to short...join the short selling threads and lets get some ideas going. I'll look for you there!


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  • Klinv sorry for the late reply. I also worry about stocks that I'm short of getting acquired at a premium. Here are some precautionary measures I take: I don't pyramid into small and mid-cap shorts, and now after my fiasco in RIMM, I don't pyramid into shorts with ongoing litigation. My favorite shorts are the NYSE stocks, big caps, and the QQQQ's, I pyramid into these. Although the short yields won't be as high with big caps, they are much safer plays so they work perfectly for my goal in a down market -- to do at least slightly better than preserve my capital.

    I don't screen for shorts every day, but days like today are perfect. On the second distribution day in a row and any following distribution days I go to stockcharts.com's "stock scans". I look through all the "strong volume decliners" on the NYSE and some of the Nasdaq issues and make a list of stocks that have more than one day of distribution in a row, preferably taking the stock from its peak to below its 50 day moving average. The weaker the volume while the stock was at its peak, the better. And the stronger the volume during the sell-off, the better. These stocks make up my watch list for the next few weeks. I watch them to see how they rally. If the volume is significantly lighter on their rally and they aren't able to get above the 50-day or back up to their prior peak, then they are perfect! When I see the QQQQ's start to sell off, I'll start shorting the stocks from my list that also look like they are teetering on the edge of a cliff, possibly even starting to freefall.

    I'll share with you the list that I made tonite. Not all of these are shorts, just short-candidates that I will be studying for the next few weeks. I feel that all of these stocks are too risky to short at their current prices. You don't have enough information to short them intelligently until you see how they rally. Here's the list:

    AGP CNC ENS ETN HDI NAV PII TGI AAPL IMDC INFY SGTL CLF PD

    I didn't find the last two from the scan, just so you know. This list is more than enough new shorting ideas for me and I probably won't spend a lot of time looking for more ideas for a couple weeks. I usually ignore most other stocks during the trading hours except for my list and my open positions. I also keep a bull list, you know, just in case ;-)

1 Comments:

At 4:27 PM, Blogger Mr. MFEMFEM said...

Good calls on your short list.

 

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