Four New Short Positions And Two Stocks I Am Adding To My Existing Short Positions For Friday’s Stock Market Session

February 14, 2008

It was another one of these days where the market just does something the exact opposite of the day before. This should not be a surprise to anyone reading this blog as we have discussed this choppy market and how to handle it ad-naseum at this point. For the past month the market is really going nowhere but as we go along more and more nasty charts develop and less and less good looking charts stay good looking charts. Some of those good looking charts that are now ugly are in the energy-independent oil and gas sector. By early 2008 those charts looked fine, but a month later and now those stocks are starting to crack on some very strong volume. Hence the two oil stocks below as new shorts from very nasty near-perfect short patterns. Add SLB to it as it reverses here at both moving averages, and you have yet another top group starting to rollover. WYNN is another stock that was in a sector loaded with leading stocks. In fact, MGM, looked like a short tonight but I decided that stock was down a bit too much already and the reversal wasn’t close enough to the 50 DMA. SLF seems to be the best new short because the volume on the first selloff was very heavy and the distribution picked up as it fell. After a lower volume rally that failed to make it back above the 50 DMA, the stock has rolled back below the 200 DMA, and is now breaking down on very strong distribution. But the best short tonight based on chart pattern is ABB. I know ABB has some great fundamentals but all of this red on the chart (huge distribution and red to max red BOP) makes it way too juicy to pass up. I take comfort in knowing that estimates for ‘09 are lower than ‘08 and I know that the fundamentals are always the best at the top so with the stock chart selling off on such massive volume and knowing that technicals lead fundamentals I am fine with going short this stock. However, don’t get too nuts. You see how MOS POT MON are doing. Be careful out there. Keep your cash heavy. Bull markets are 10x to 100x easier to make money in than bear markets. This is not a bull market; wake up: it is a bear market. HAPPY VALENTINES DAY! XOXOXOXOXO

new short positions: SLF NXY NFX WYNN

SLF is breaking down before even touching the 200 day moving average, on extremely strong volume. Cut your loss with a close above the 200 day moving average, if the stock does not move lower immediately.

NXY is failing at the 50 and 200 day moving average, after a low volume rally, on very strong volume. Cut your loss with a close above the 200 day moving average, if the stock does not move lower immediately.

NFX is reversing at the 50 day moving average and nearing a breakdown below the 200 day moving average, on strong volume. Cut your loss with a close above the 50 day moving average, if the stock does not move lower immediately.

WYNN is breaking down below the 50 day moving average after reversing at the 200 day moving, on strong volume. Cut your loss with a close above the 200 day moving average, if the stock does not move lower immediately.

adding to existing short positions: ABB SLB

ABB is breaking down at the 200 day moving average, after failing to get back above the 50 day moving average, on extremely strong volume. Cut your loss with a close above the 200 day moving average, if the stock does not move lower immediately.

SLB is reversing near the 50 and 200 day moving average, on below average volume. Cut your loss with a close above the 50 day moving average, if the stock does not move lower immediately.