“If the S&P 500 is breaking down, oil continues higher and the interest rate trend continues higher, why not look at a few ideas for the short side?” asks one reader. I have always found it more difficult to make money with short sales than longs, but that does not mean it cannot be a very profitable strategy when conditions are right. One of the biggest mistakes made by short sellers is to try to pick a top in a stock that is “up too much”. The key is to wait for signs of distribution of the stock and to then be ready to sell short when the trend begins to turn lower and, as with longs, your analysis should not be limited to just one timeframe. Below are a couple of stocks that appear to be breaking down and can continue lower. One word of advice to short sellers, be quick to take your losses if the trend moves against you, even quicker than you would on the long side. A short squeeze can happen very rapidly and if you have not been stopped out with a small loss, those losses can add up very quickly. Another option that lessens the potential pain of a short squeeze is to purchase put options instead of selling the stock short.
Does the downside momentum pick up below 49.35?