No New Swing Shorts For Monday As The Stock Market Is Still Consolidating The Gains From The Follow-Through Day On Wednesday

March 23, 2007

No new swing shorts for Monday as 3 out of 4 stocks follow the general trend of the market. The trend of the market is up, after Wednesday’s follow-through day. While the markets are in an uptrend it is silly to go against the trend when so many of the longs that I have been taking are working so well. Until these longs start failing or rolling over, it is not wise to against this trend.

It is still too early to short as most perfect shorts have rallied back and fixed their broken charts. The best time to short is FIVE TO SEVEN MONTHS AFTER a market has topped. So obviously if we topped on February 27th we still have a while to go before shorting becomes the appropriate play.

There are very few shorts that are working right now. One of them is JBL. JBL cracked hard through the 50 dma on very strong volume after failing at the 200 dma. That was a perfect short setup and it worked out perfectly, falling 10%. But besides JBL and RVBD, very few of the chart patterns that normally precede major falls have not worked. This is what Jesse Livermore called testing the market. The market failed the test that it is the right time to short. So if you are a bear, you must wait.

There were no perfect short patterns tonight but JNJ looks like it is about ready to puke it all up. KBH and LEN also had very heavy volume selloffs/reversals at key moving averages. This amount of selling shows that there is still plenty of pain to come for these stocks.

Last 5 posts in Free Archives Shorts

Posted by Joshua Hayes | Filed Under Free Archives Shorts 

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