One Stock I Am Adding To My Existing Short Position For Wednesday’s Stock Market Session

February 26, 2008

Well, after the wonderful gift that TSRA provided us last night I guess we can’t expect that from this one. Though it would be very nice. However, so those who are only a silver subscriber, I will let you know that I am covering 50% of the TSRA short and I am covering 25% of my GOOG short from 1/4. This should help give you an idea of where and how I like to cover my shorts. Obviously, I will hold the rest expecting lower prices but with the stocks down so much already a vicious rally could definitely hit both of these stocks. And since we can not predict the future (don’t forget Jim Cramer can not, Jim Rogers can not, NOBODY CAN!) we can only prepare for both outcomes. So I will hold some TSRA and GOOG expecting those lower prices but will cover a good amount, since they are down a LOT already. For future references, if you ever have a stock fall 25% or more in one day, right after going long you must ALWAYS take 33% to 50% off the table. You can not take gifts like TSRA lightly. This doesn’t happen often (last time was MAMA’s 200% gain in two weeks) this fast but when it does it sure is VERY NICE. As for HLEX, make sure you keep this short to a manageable size of your account. This is not a perfect chart but neither was TSRA. However, this does have the same similar pattern of failing a breakout with a high volume reversal right below the 50 and 200 day moving average. It is not as “fierce” as TSRA but it still is happening. Be careful out there and if in doubt, newbies, remember, cash is king!!!

adding to existing short position: HLEX

HLEX is breaking down below the 50 and 200 day moving average and putting in a very bearish intraday reversal, on very strong volume. This is a pretty nasty reversal of a breakout and after my first short the stock is still acting very weak and still in a position to add to. The bearish intraday reversal on a volume surge along with BOP falling to a lower level confirms just how weak the stock is. Hopefully, this reversal can turn out like TSRA. However, I think TSRA is not going to be the norm and instead is the exception. It would be nice if the BOP could go red as it falls or else I will take profits faster. Cut your loss with a close above the 50 day moving average, if the stock does not move lower immediately.