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Shorting is profitable when one practices patience

The window of opportunity when it comes to shorting is ever so brief but when it does open, the profits can be substantial. We test short positions with a small number of shares because often, the position may not work, so we will cover at breakeven or a tiny loss.

The Short Sale Set-Up reports Virtue of Selfish Investing has emailed out to members over the last few weeks have been profitable, on balance, in this highly challenging market. So despite a market that is heading lower, one can still profit.

Our twin calls on shorting FNSR and LVS on May 17, our controversial call on shorting AAPL on June 6, and most recently, our short calls on UA, LULU, and NTAP have all been profitable so far.

And members enjoy the time-value of our calls. In other words, when a stock falls, it often does so in a swift manner. Most stocks tend to go up in an orderly manner, one step at a time, but that same stock, once it tops and starts into a downtrend, often jerks lower in quick swift drops, thus if one is on the short side of the trade, one can make a substantial profit in short order (excuse the pun).

One must not get greedy, however, when it comes to shorting. A nice profit realized over just a few days should probably be covered since, as mentioned above, stocks may rise in an orderly manner, but they seldom fall in an orderly manner. Oversold stocks often bounce hard and can be reshorted. So it is often best to take one's profit and watch for a weak bounce to renew a short position.

Given that the market is in a logical position from which it could stage a reaction rally, with the NASDAQ undercutting its mid-March low at 2603 and the S&P 500 hitting its 200-day moving average, watch for future Short-Sale Set-up alerts from Virtue of Selfish Investing if this bounce continues for 2-4 days or more.

The information contained herein is not, and should not be construed as an offer to sell or the solicitation of an offer to buy any securities. The information set forth has been obtained from sources which we believe to be reliable, however, these sources cannot be guaranteed as to their accuracy or completeness. The information and content expressed herein are subject to change without notice and MoKa Investors, LLC and/or its employees may from time to time have long or short positions or may acquire direct or indirect beneficial interest in securities mentioned. www.MoKainvestors.com
Published: 17 Jun 2011 02:07 ET
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