Amazon picked as short candidate by Briefing.com:
GO WITH THE FLOW: It amazes me when so called "active investors" start to tear up every time
the punch bowl is pulled away. This time the U.S. equity markets are using weakness in other parts
of the world to correct the market across-the-board, rather than just those mutli-nationals with
significant exposure to economic weakness in foreign markets. Also playing a major role in today's
weakness is the attempt by money managers to secure gains. After all, no sense in losing those
handsome 25% and 30% gains only two months before the end of the year by trying to be a hero.
Of course, as an individual investor it's much easier to place a market order on a Yahoo! or a Dell
and watch the stock do 25% a month. But for those investors who truly view themselves as informed
and nimble, down markets are almost as good as bull rallies. While riskier in several ways (e.g.
margin calls, getting called into the stock, short squeezes), making money on the short side is not the
dirty choir that many claim. So, instead of complaining about how dumb it is that certain U.S. equities
are reacting to weakness in Asia, despite their lack of exposure, be opportunistic. When you see
stocks starting to fade and there does not appear to be any sign that buyers are willing to step in
front of the train (like today), go with the trend. When staring such negative sentiment in the face, it
doesn't make sense to sell and rush to the sidelines, simply trade in your uniform for the digs of the
other team. There are no loyalties in stock trading. Of course, going short isn't for everyone,
especially when its done as a trading tactic rather than based on a fundamental change in your
opinion of the market. If you don't stay on top of the markets most of the day, however, it probably
would be wisest to either dump-and-run or to maintain your longs. But with the Nasdaq down 65
points today, and Brazilian stocks down more than 10% intraday, the nimble might want to be
looking for those stocks with the most potential to crack (e.g those with high P/Es, large
momentum following, etc...) The first places I would start would be the Internet stocks (e.g.
Amazon.com AMZN), oil drillers (e.g. Friede Goldman FGII), and telecommunications
equipment (e.g. TEKELEC TKLC). |
