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4 Stocks Prime For Shorting

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September 23, 2010 – Comments (1) | RELATED TICKERS: GIS , ACT , HCN

The screen below are for those stocks that have been on a solid uptrend of late, but are starting to show signs of breaking down along with a loss of interest by the street as a whole. So if you are looking to short this recent market rally, use the list below as bit of a primer to get your bearish energies flowing. These four stocks look pretty good when just looking at price and volume from a long-term perspective, however, what is concerning is some of the glaring bearish divergences that are popping up. One such indicator is the Time Segmented Volume - TSV that shows all of the stocks below in the negative, which is a good indicator that the longs are starting to get a bit skittish in their current positions, and are taking profits as a result.

One particular stock to pay close attention to is GIS. Surprisingly it rallied all of August when the market was down notably, and so far in September is only up a couple percentage points, despite the market being up over 10%. There is also a huge spike of volume over the past five days, which to me is a strong sign of distribution occurring. 

Here are the 4 stocks prime for shorting...

1 Comments – Post Your Own

#1) On September 23, 2010 at 3:37 PM, ikkyu2 (99.10) wrote:

I don't know, I don't think this is so crazy.  GIS pays a dividend every three months and - guess what - you can find out when that is going to be.  You don't want to hold a short position at the close of trading on a stock's ex-div date, or you will be liable to pay the dividend - out of your cash at hand in your margin account.

But short trades have a term that is short.  That is why it is called shorting.  If you are planning to short more than three months, you have a peculiar plan.  So it's not hard to plan out your shorts so they don't overlap the ex-div date.

I am not sure I like the idea of shorting GIS based on some vague technical divergences.  I would want to hear a catalyst.  GIS is a very low volatility stock and there is certainly the risk, given the dividend, that you'd be forced to close out the short trade at a loss.

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