Short-Sale Set Up - Update 6-21-16

Published : June 21 2016 at 8:36 ET

Yesterday's rally merely served to bring stocks for which we have recently discussed as short-sale candidates back into shortable range.

AAPL, GOOGL, NFLX, and TSLA all opened up yesterday an rallied into areas of potential overhead resistance before reversing close near their lows for the day. Both NFLX and TSLA reversed at their 20-day moving averages (200-day also for TSLA), while GOOGL retraced a portion of last Friday's big downside dive and AAPL remained within its current bear flag without rallying any significant amount during the day. These stocks' persistent weakness likely indicates they will move lower should the general market weaken again, and we would continue to use rallies into areas of overhead resistance as opportunities to short the stocks.

FB is also now acting like a late-stage failed-base set-up now that it has breached its 50-day moving average and is now in a five-day bear flag as it "lives" beneath its 50-day line. We believe any rallies up towards the line at 115.80 would offer optimal short-sale opportunities, although the stock is currently within 2% of the line thus could be considered to be within shortable range at current prices.

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