SSS - Thoughts on the Short Side: CRM and LNKD

Published : May 22 2012 at 12:03 ET

Both CRM and LNKD are continuing to rally along with the market, but as they rally they are coming up into higher zones of resistance. If one were using tight stops on these from Thursday and Friday, one would likely have been stopped out a couple of percent ago or more, but traders should also remain aware of the fact that these stocks become shortable again as they rally into higher resistance areas. For CRM this is the 50-day moving average at 152.16 and for LNKD this would be the short area of overhead resistance at around 105. Note that LNKD slid past its 50-day moving average, but this can be the case with Late-Stage Failed-Base (LSFB) or Punchbowl of Death (POD) types of formations - they can have several sharp rallies back up into their 50-dma and a little beyond. If the market begins to weaken however, these remain short-sale targets, using new stops that should not be more than 3-5% beyond where one enters a short-sale position.

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