Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Hobie1Kenobe who wrote (20956)	11/30/2000 8:07:36 AM
From: Dealer	Read Replies (1) \| Respond to of 65232

STOLEN FROM GREG'S THRED: From: Walkingshadow Thursday, Nov 30, 2000 4:33 AM ET Reply # of 7092 Here's part of a PM I sent to a friend. He liked it very much, so I thought perhaps others might find it of value. Me, I'm a little concerned with my outlook now. Three months ago, I had maybe one or two short positions, out of about 20 or 30 total. Now, I've got no long positions at all. Just as to a guy with a hammer, everything looks like a nail, I just keep seeing Short Me ! written across every chart I look at. But, for better or worse, here it is. =========================================================== The short side really looks to me the only side to play, at least on the Nasdaq, doubtless eventually the NYSE also. I think the stocks to look at for potential short opportunities have the following ideal attributes: 1. Overvalued relative to their peers and the market as a whole 2. Evidence of chart weakness, e.g., a topping pattern, a new downtrend with downsloping moving averages, etc. 3. Technical weakening, hopefully from a relatively overbought state 4. Volume weakening (i.e., volume envelopes consistent with diminishing buying pressure and increasing selling pressure) 5. Slowing earnings growth, or the prospects of same looking forward 6. Excessively bullish put/call ratio compared to the market, and by historical standards for the stock in question 7. Less than 5 days trading volume in total open short interest 8. Little options-related downside support 9. Overly optimistic analyst ratings, particularly recent upgrades 10. No professional gap down yet This last is plus/minus, in that if all the stocks in a particular sector have sold off with professional gaps, and there is one stock that remains overvalued but the chart does not yet show professional selling, then that stock is very likely the next on the hit list. OTOH, the appearance of a professional gap down wouldn't necessarily preclude a short, but just indicates that there won't likely be big selling momentum anymore, since most of the selling will come from the retailers. Under these circumstances, it would behoove you to try to get a handle on how much institutional ownership was present before the gap down, and roughly how much remains. That will tell you the potential magnitude of the selling pressure going forward. I wouldn't demand that all be present, but the more the better. ========================================================== All JMVHO.................... Regards, Walkingshadow