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SSS - Thoughts on the Short-Side

The reflex rally following yesterday's undercut of the 2603 level on the NASDAQ and the testing of its 200-dma by the S&P 500 has led to a nice bounce today, helped along by news that Sarkozy and Merkel, the French and European leaders, are assuring us all that Greece will get what it needs. This is a typical type of news driver for reflex rallies.

We note that AAPL is now trading back below its 200-dma, and we view the stock as a strategic short, e.g., potential lows in the 200's, while NTAP and LULU both remain below their 50-dma. UA, which tends to be more volatile, has gapped above its 50-dma, our rough guide for a stop, but given that this stop is extremely tight, one could also choose to see how it closes first, depending on one's risk tolerance.

This rally in the market and short-sale target stocks may be be shortable, but the idea here would be to short into the rally, and if you are not showing some progress by the close then you could back away or elect to work off the upside stops when it comes to covering. The general market may rally one day, or it may rally for a longer period of time, but this cannot be determined right away. The key here is to watch short-sale target stocks, and make decisions on whether to begin entering a short position as they rally up towards logical areas of resistance, such as that AAPL has encountered now at its 200-dma, or NTAP and LULU at their 50-dma.

For the purpose of fair disclosure, we currently have positions in NTAP, LULU, and AAPL.

This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2021 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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