SSS - Thoughts on the Short-Side for Tuesday, September 27th

Published : September 27 2011 at 10:03 ET

With the market in the third day of a rally attempt off of last week's low's, we see two of our short-sale target stocks, BIDU and SINA, rallying up into potential near-term resistance at 130 and 90, respectively. We would look at these as being shortable on these rallies up into those price levels, and one could test short positions here, within 2-3% of the stops, using those price levels, 130 for BIDU and 90 for SINA, as your upside stops.

With the NASDAQ Composite pushing up to its 50-day moving average at 2570, this is a logical area to test shorts, with the idea of perhaps getting more aggressive if the index shows some high-volume rolling over from any point at or near the 50-day moving average. Otherwise, keep stops in mind and don't be afraid to test the short side into this rally, but be ready to turn and cover if the rally becomes too persistent.

The market is rallying on news of a European "solution," as well as yet another potential government shut-down being averted by Congress (although we consider this to be mostly a lot of noise either way), and this seems to be consistent with the heavy news-oriented volatility we are seeing.

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