In general one should pay attention to undercuts of support or moving averages as these can provide logical points from which a short-sale target can rally. Members should read the book Gil co-authored with William J. O'Neil, "How to Make Money Selling Stocks Short" as well as the chapter on short-selling in the book Gil and Dr. K wrote, "Trade like an O'Neil Disciple." The key here is understanding what the market will give you here, so if the indexes don't break and you find your short positions are producing quick profits as they drop right down to logical support (e.g, RIMM hanging right around the 200-dma here) and going nowhere, be cognizant that an upside move in the general market could drag these higher. This is why Gil will tend to cover his BIDU and RIMM shorts in these logical areas of support, waiting for the next opportunity as he monitors the stocks within the context of the general market action. The action of the general market is more important to pay attention to on the short side than it is on the long side. We just want to point this out for anyone who is new to our methods on the short side, because as we go into year-end, history shows that the market tends to drift higher, although that is never a guarantee, and the maket can always throw you a change-up and sell-off into year-end.
SSS - General Thoughts on Shorting into Year-End
| Published: | 20 Dec 2010 18:23 ET |
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