Thursday, June 23, 2005

Ouch if you're long like I was

I was heavily long going into the open this morning. I actually thought those bottom patterns all over the charts might actually have a positive resolution.. today! Well I'm a lot less long as of today's close. And just as a reminder that anything can happen, have a look at the intraday chart for KRB. Yea I shorted it just minutes before that huge (relatively) spike into the close.

Its my fault though, for leaning too heavily long before the breakouts began in earnest, so I didn't have adequate capital to do the usual hedging I like to do at market turning points like nasdaq 2100. So now I'm chasing shorts at a less than optimal time =/ I was almost smart enough to do an intraday short of FORD right after I stopped out of it @ $19.80. Would have been an easy 2 points...

Anyway, if the market keeps going down from here, yeah I'll lose a little more money at first, but it usually doesn't take much more than a week or two for my exposure to rapidly move from ~150% long to ~100% short if the market is falling on volume. But thats the problem with a lot of the stocks I had my eye on for shorting, they lacked volume throughout today's slide-off. If the market really is putting in a top here, the volume will start to balloon on losing stocks, and this is probably what I'll be spending my "homework" time in the evenings looking for. Those avalanchers that rally on pathetic volume make some of the best short candidates after their next rally crests.

On distribution days like today, it pays to have a look through the results of a "strong volume decliners" screen. I use the one on stockcharts.com's stock scans page to make a list of symbols to watch over the next few weeks for bear flags.

2 Comments:

At 10:34 PM, Blogger Gordengekko said...

Jon-

We are probably going to short FORD if it doesn't get support at the 50 dma. The 50 dma is 17.83 range. It seemed to bounce right off the 50 dma. That could of also been a buying opportunity at or slightly below the 50 dma. Only time will tell and tomorrow is key.

Gekko

 
At 11:24 PM, Blogger jontait said...

I completely agree with you. Tomorrow morning will probably be a huge opportunity in FORD. My guess is that if the market is just slightly down at the open, and FORD isn't down, it will probably be heading back up. If the market or FORD gaps up very much tomorrow, then the easy opportunity may be spoiled.

 

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