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 : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: Muizz M. Kheraj who wrote (27815)	11/4/1997 8:27:00 PM
From: Hans	Respond to of 58727

One cent for CSCO? I predict DOWN DOWN DOWN on profit taking. (I've been wrong before (AMAT), but occasionally correct also (CPQ, DELL(?)) BORL moving up 1/2 point daily. go KLIC go

To: Muizz M. Kheraj who wrote (27815)	11/4/1997 10:56:00 PM
From: Autumn Henry	Read Replies (1) \| Respond to of 58727

From the Street.com something interesting for all: Quant View: Working with a Short-Selling Screen By Ted Murphy Special to TheStreet.com 11/4/97 11:32 AM ET I had a series of buy-side quant screens to choose from today, and I couldn't bring myself to highlight any of them. I had a fresh list of High Growth companies, some new contrarian stocks in the Warren Buffett mold, a list of hot earnings revision names, and yet none of them looked attractive when I researched the individual companies. All of the stocks looked extended and vulnerable. In the end, the short-selling screen I developed using criteria culled from Gary B.Smith's technical analysis articles just looked more interesting. (Smith writes Monday's Technician's Take for TSC.) Although the following screen doesn't anticipate the first move down, it does serve to highlight companies with growing selling pressure. We should consider getting short, because the holders of these names are now considering getting out. The screen's criteria are: Price drop yesterday of more than $1. Volume yesterday 50% higher than the 20-day average. Price closed yesterday below the 50-day moving average. Market capitalization greater than $500 million. Stock still within the top half of its two-year price range. I added this last criterion because I wanted to avoid recommending the short sale of deeply depressed stocks. Potential Near-Term Short Sales 11/0311/03EstMktCapTkrDescriptionPriceChgP/E($Mill)BSNBOSTON TECHNOLOGY INC 25.88-1.2521.2706CMVTCOMVERSE TECHNOLOGY INC 39.81-1.4421.11,001CSLCARLISLE COS INC 41.88-1.3816.81,262EFIIELECTRONICS FOR IMAGING I45.63-1.1321.72,366FJFORT JAMES CORP 38.63-1.0615.17,291IIXCIXC COMMUNICATIONS INC 31.25-1.7599.0966NATINATIONAL INSTRS CORP 42.63-2.8824.1924SNSSUNDSTRAND CORP 51.88-2.5015.13,085USFUNITED STATES FILTER CORP37.13-3.0024.63,076 Developing a Short-Sale Screen It is much harder to develop quantitative criteria to spot short-sale candidates than it is to develop useful screens for the buy side. None of the hundreds of backtests I've run based on earnings momentum, earnings revisions or various valuation measures have resulted in a useful strategy for actually making money on the short side. Many of these criteria seem to yield underperforming portfolios, but you'd still have lost money selling the companies short. It seems that negative information is priced into stocks too quickly and aggressively for quantitative criteria based on earnings estimates to be helpful. Short selling due to high valuations, on the other hand, fails when the seemingly overvalued companies proceed to grow faster than the consensus. Turning to Technical Analysis In the end, it's a timing issue. People who own stocks follow them closely, and they are likely to be on top of any negative trends or news announcements. By the time negative news works its way into earnings estimates, the damage is done. Although not anticipatory, price and volume data are timely, and the technical screen listed above provides useful names for further research. <Picture> <Picture> Ted Murphy (ted@pdgm.com) operates the MarketPlayer Web site. Prior to MarketPlayer, he was a partner at Equinox Capital Management. c 1997 TheStreet.com, All Rights Reserved. --------------------- Autumn