I think the main problem with high fliers is that everyone knows to short them and it works against you. If there is more short interest than long interest (not really, but you get my drift), then the stock price can only go UP! Short sellers are the only people who are guaranteed to buy a stock. Long people don't have to buy, they don't have to sell, they don't have to do anything. Shorts have to do something eventually, and they must buy (or cover). In fact, AMZN and YHOO probably love short sellers because they prop up an otherwise useless stock in the atmosphere.
That's the problem I see with AMZN and YHOO. They're just so ripe for picking, but the shorts are all piled in which drives the price up, the dummies. I have a short position on AMZN, and I feel comfortable that I can still make money on it (I haven't lost double yet, so it's possible...) Eventually, the year end tax psychology, along with all those insiders (and possibly everyone else) lined up to sell, the stock will go down a bit. My target is $40, and hopefully even lower. When they sell, however, can they even overcome the volume of the shorts who will start buying? Oh well.
In summary, stay away from the high-profile high fliers unless you are as nimble as Jack. Jump over a candlestick too soon or late and you'll surely get burned. |
