Author: Mike Scott Date: To: 'CANSLIM Stock Investment Group' Subject: [CANSLIM] Short watch list
Here is my short side watch list with comments.
Symbol Pattern When
ABB Head and Shoulders if rallies into the 50-day
ACH Head and Shoulders if rallies into the 50-day
AG Late stage base failure if rallies into 50 day
several times
AKS Head and Shoulders if rallies into the 50-day
AMZN Head and Shoulders if rallies into the 50-day a
couple of times
BCSI Head and Shoulders if rallies into the 50-day
BEAV Head and Shoulders (?) if rallies into the 50-day
CHL Late stage base failure if rallies into 50 day
several times
CRNT ` Head and Shoulders if rallies into the 50-day
CROX Head and Shoulders if rallies into the 50-day
DRYS Price Breakdown if rallies into the 50-day
EXM Head and Shoulders if rallies into the 50-day
FSLR Head and Shoulders (?) if rallies into the 50-day
FTI Late stage base failure if rallies into 50 day
several times
FWLT Head and Shoulders (?) if rallies into the 50-day
GT Short if rallies into overhead supply
HANS Head and Shoulders if rallies into the 50-day
ISRG Head and Shoulders (?) if rallies into the 50-day
JNPR Head and Shoulders if rallies into the 50-day
several times
MA Head and Shoulders if rallies into the 50-day
MELI Head and Shoulders if rallies into the 50-day
several times
MTW Head and Shoulders (?) if rallies into the 50-day
NM Head and Shoulders if rallies into the 50-day
NOV Late stage base failure if rallies into 50 day several
times
NVDA Head and Shoulders if rallies into the 50-day
several times
OMTR Head and Shoulders if rallies into the 50-day
several times
PBR Late stage base failure if rallies into 50 day several
times
PCP Late stage failure, H&S if rallies into 50 day
RIMM Late stage base failure if rallies into 50 day several
times
RIO Head and Shoulders if rallies into the 50-day
several times
RRI Short if rallies into overhead supply
SGR Head and shoulders if rallies into the 50-day
SIGM Head and shoulders (?) if rallies into the 50-day
SOHU Head and Shoulders (?) if rallies into the 50-day
SPWR Late stage base failure if rallies into 50 day several
times
STP Head and Shoulders (?) if rallies into the 50-day
VCLK Head and shoulders if rallies into the 50-day
VDSI Head and shoulders if rallies into the 50-day one
or two more times
X Late stage failure if breaks 50-day with
volume
When I say I am waiting for multiple rallies into the 50-day, this is
because I believe the stock needs to wear out the short takers. I don't want
to short with the crowd; we get run in that way. The "(?)" in the list means
that the pattern isn't finished forming yet.
Features I look for in a short candidate are:
1. Prior leader, best if last phase of run up has acceleration
2. A sharp breakdown in price somewhere in the topping phase
3. Largish average volume, too much volatility in thin stocks
4. Either few short takers at the time of my short or evidence of worn out
short takers, i.e. waiting out multiple short covering rallies
5. Ability to short in a non obvious place, this tends to help make sure
there are not a lot of shorts at my price
6. Lack of support regions within 15-20% under my short taking price. I want
to take profit before a rally occurs.
Since I have participated in the last rallies, I have lists of prior leaders
and start there.
A sharp price breakdown often occurs on the right side of the head of a H&S
pattern or a general breakdown from a late stage base. Gil Morales, the best
short-side artist I know screens every day specifically for a large price
drop over an eleven day period to identify in advance possible shorting
candidates. He uses O'Neil's professional package called WONDA, pricewise
out of reach for me. HGSI (High Growth Stock Investor) lets me come close to
this screen so I run it every day.
Large average volume is an easy criterion. The rest of my picking comes from
inspecting charts, I don't know of a way to automate 4-6.
One of my favorite places to short is rallying into overhead supply. I don't
have a screen specific to this, I just happen onto the pattern occasionally,
like GT and RRI.
