Short-Sale Set Up - General Comments on Recent Short-Sale Reports

Published : March 1 2016 at 18:54 ET

With the NASDAQ Composite and the S&P 500 both clearing their 50-day moving averages today on higher volume, the odds of significant success on the short side diminish significantly.

Reports on TSLA and NFLX were sent out yesterday as the two stocks were approaching potential resistance. TSLA has moved lower after finding resistance at its 50-day moving average while NFLX has pushed just beyond its 10-week moving average. TSLA therefore remains in play but NFLX can be considered to be stopped out. Given the general market environment and the fact that today's breakdown in TSLA was helped along by a negative report from Citron Research, one might consider taking profits if a short position was taken at the 50-day line. 

FB and MCD can also both be considered to be stopped out. We are interested to see whether FB can "re-breakout" through the 110 level, something that is a real possibility if the general market rally continues.We would only be interested in revisiting these on the short side IF and only IF the general market rally fails. So far there is no evidence to support a rally failure thesis, and we would avoid the short side of the market until such evidence is in fact seen.

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