Two New Short Positions And One Stock I Am Adding To My Existing Short Position

September 20, 2007

new short positions: PLCM RNT

PLCM is reversing right at the downtrending 50 day moving average and closing near its LOD, on very strong volume. This stock is attractive as a small short because, on this bad move, BOP turned red and the RS line is hitting new lows ahead of price compared to the June and August lows. The 50 day moving average is also crossing below the 200 day moving average after the stock failed to stay above these averages on three separate occasions since the March top. This stock has some great fundamentals and the market is strong so, remember, I am keeping this very tiny. This is just a test to see if new shorts are going to work here. Depending on how they act that would indicate to us if the rally is weak or strong. Cut your loss with a close above the 50 day moving average, if the stock does not move lower immediately.

RNT is reversing right at the 50 day moving average and closing at its LOD, on very strong volume. After putting in one top in February, RNT rallied back to the old highs in June and ended up putting in a double top as prices soon crashed below the 50 and 200 day moving average. Since then, the stock has rallied right back to the 50 day moving average on low volume. After drifting around for a while, selling now appears to be back in vogue, with BOP back in the red zone and getting more red and the stock putting in a poor reversal on heavy volume intraday two days ago and now breaking down right at the 50 day moving average on heavy volume. Fund ownership has fallen from 105 to 99 funds the past four quarters, showing that the big money is losing interest in this story. The stock is also in the lowly retail-home furnishings group which sports a horrible group RS rating of 5. Cut your loss with a close above the 50 day moving average, if the stock does not move lower immediately.

adding to existing short position: FDX

FDX is failing and reversing right at the “death cross” of the 50 and 200 day moving average, on very strong volume. This stock has been in a long topping process putting in a double top with the highs in February and July. After the double top, the stock has been drifting around the 50 and 200 day moving averages since going below both of them in late July. After starting a selloff in August, the stock put in a powerful reversal on 8/16, indicating the stock might be done going down already. However, since then the stock has failed to get back above the moving averages and they are now starting to rollover and have crossed each other as they both trend down. This is called “a death cross” and is very bearish, especially with the indexes trending down before the cross. The engulfing bearish candlestick pattern today on very strong distribution should be the move that finally starts the downtrend. Fund ownership has fallen from 454 funds to 393 funds, showing that the big institutional investors are losing interest in this company. The Transport-air freight group has a RS of 27 and that combined with the stock’s E Acc/Dis rating is not good. Cut your loss with a close above the 50 and 200 day moving average, if the stock does not move lower immediately.

Two New Short Positions And One Stock I Am Adding To My Existing Short Position

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