This week with StockPunk
It seems like there may be some opportunity out there this week with as oversold as the market is now. But I thought that last week as well, and that didn't turn out too pretty.
There aren't really any stocks that jump out at me in the Zweig screen this week, so I'll probably use this week as an opportunity to learn how to short a stock. I've never done it, and I know that puts me at an extreme disadvantage (especially in this market).
We're officially in a down-trending market which hasn't happened since 2003. That can't be good. Corey at Afraid to Trade pointed out to me that the S&P monthly chart looks eerily similar to the run up and subsequent sell off in the late 1990s and early 2000s. Time will tell.
I began trading in March of 2003, so I haven't had to deal with a down-trending market yet. I'm trying to quickly learn, but trading short doesn't come naturally to me for some reason. 
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2 comments:
William O'Neill's book "How to Make Money by Selling Stocks Short" is the best intro for shorting stocks, especially for growth investors. Bottom line is to 'short at the right time' and use tight stops (like 6%) and aim for profits at 20-30% on a trade. Classic trade is to short after a head-and-shoulders pattern and after 3+ failed rallies through the 50d SMA line. Avoid shorts where stock is thinly capitalized, largely held by insiders or thinly traded and also where short interest is high, due to risk of short squeezes.
My strategy looks for highly leveraged companies with slowing sales and falling revisions in addition to the trends that O'Neill mentions. Last week was short LVS, MGM, RCL, CCL, GPI and VRSN. Made money on all but VRSN. Flattened positions on Friday as I am unsure of what is going on in the market at the moment but have a negative bias still.
You should work on learning how to short because it also informs you on when to sell your long positions.
Good luck.
Scott,
Agree with you on the need to be able to short. It's a necessity when we are in a down trending market. Unfortunately too few want to discuss/think about shorting strategies/screens.
I have been working on some shorting screens and found that Zacks might be more useful for shorting than going long. If you still have RW, try playing around with screens based upon Rank = 5 and low relative strength - they look good.
Interested in what you find re: shorting.
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