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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis

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To: Mike Harkness who wrote (846)1/26/1998 3:57:00 PM
From: James F. Hopkins  Read Replies (2) of 2506
 
To ALL; In shorting any stock you can get the Short Interest files
from the Nasd..some of the NYSE ones from BigCharts. Shorting
with out knowing how many shares are already shorted and if there
has been in increase or decrease of the short interest in the last
month is leaving out the one most importent aspect of shorting.
That is knowing about were you are on the Totom pole of shorts,
and if or when you might expect a squeez play.
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You will find the prices of stocks with a lot of short interest,
are more effected by the rate of change in that interest than any
other factor. Chart them both and over lay them if you doubt it.
Going short just after a squezz is the best position to have,
or finding one that you feel will fall but being early to short
it. People who arrive late at the table almost always get stuck
with the tab.
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Broken stocks are good shorts only "if" the table is not already
packed with shorts.
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I mention this because I see so much talk about shorting, but
very little about the short interest in a stock. And in my
wonderings on SI I've found more hype than fact. Some so called
experanced shorters I've lurked in on, have made serious
mistakes over time..that if they were really shorting all
of their recomendations they would be in the poor house.
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Be careful and remember you can't do enough home work.
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Personally I now play baskets, which takes a lot of risk out
of the equation. You can't get squeezed say shorting SPY..as
no one is big enough to squeez the entire market.
Going from short to long on it, often with a pause to see
if the trend has really changed has been more dependable
and the trend easyer to determine than single issues.
Jim
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