With the Dow up 150 points today, the last thing anyone is probably thinking about is the short side of this market. However, we like to be ready for anything. Currently we have five names on our short-sale watch list: BERY, CAT, NVDA, WB, and X based on prior Short-Sale Set-Up reports.
BERY is extended to the downside, so would need to rally up int one of its higher moving averages before approaching what might be a more optimal short-sale point.
CAT is being bumped in Barron's magazine, so has bounced back above its 50-dma. Watch for any kind of reversal back below the 50-dma as a short-sale trigger. The stock is showing some stalling action so far today.
NVDA failed to hold at its 50-dma and gapped below the line yesterday. This comes into play as a short-sale target that can be entered on any weak rally back up into the 20-dema or 50-dma, or right here using the 20-dema as a tight stop.
WB is failing to hold its 50-dma and so is in a short-sale position here using today's high as a guide for a tight upside stop.
X has reversed at its 20-dema. We would prefer to short this as close to the 20-dema as possible, or even more optimally, on a rally up to the 50-dma at 35.84.
A warning to the wise (and not so wise): We would emphasize that short-selling requires extreme alertness and flexibility. We strongly advise that if one is new to shorting then they should start with very small positions, no more than 5% or less of their total account value. We also highly recommend that would-be short-sellers read both How to Make Money Selling Stocks Short by William J. O'Neil and Gil Morales and its follow-up, Short-Selling with the O'Neil Disciples by Gil Morales and Dr. Chris Kacher in order to have a well-grounded sense of proper short-selling technique as we practice it.