SSS - Thoughts on the Short-Side at Mid-Morning "Beach Time" on Wednesday,October 19th.

Published : October 19 2011 at 11:02 ET

Yesterday we discussed that a buy signal on the MDM might be a good indicator that short positions should be covered. That was yesterday, and now that the MDM is on a buy signal as of today, the one problem with the buy signal is that there is a dearth of buyable leadership with respect to individual stocks. In fact, our short-sale targets, GMCR, BIDU, and FOSL, remain somewhat weak, with GMCR floundering around the 82.40 undercut low of two days ago, BIDU running into possible resistance at its 50-dma, and FOSL unable to rally much aboe its 50-dma.

Thus we feel that any members looking to short this market if the rally begins to falter should be aware of these situations since we have been stalking these stocks on the short side. If there is a market rally it could turn out to be one of those strange index rallies that are quite playable using index ETFs on the upside while individual stocks and short-sale targets may remain weak. Thse should be focused on in the event the market rally does run into trouble.

Keep in mind that using a buy signal from the MDM as a "cover all shorts" type of signal can be prudent, but not necessarily optimal, and using it as such is no "holy grail" but rather a tool for minimizing risk on the short side. In the meantime the buy signal from the MDM is fully playable using ETFs, while keeping some short ideas in your trading "quiver" might be a good idea here.


This information is provided by Virtue of Selfish Investing, LLC (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2016 Virtue of Selfish Investing, LLC. All rights reserved.