My list is substantially the same Deepak.
I tend to follow the guidelines in the book How to make money selling stocks
short by Bill O'Neil and Gil Morales. It is a good book even if you never
plan to short. It is a treatise on flawed bases, good for any kind of
investing.
I have talked to Gil who is one of the better shorting artists. He and Joe
Burns will have a web letter out soon (fee). I will announce it to the list
when it is made available. Gil has modified my thinking some from the book.
That book tends to lead you to short past leaders five to seven months after
they top. Gil has taught me to short closer in to the top with failed late
stage bases as they are failing. RIMM was a recent example, shorted on
January 3. Gil also never shorts a stock that trades less than 2M shares per
day.
Bill O'Neil is a consumate bull. He is one of the last to turn bearish. Gil
can move in and out as the market breathes. Our own Fred Richards does that
also. Gil was 200% short just prior to 9/11/01 with Bill's money. He has
uncanny timing. He is a bold one that is not afraid to put a lot on the
line. He was short 500,000 shares of Microsoft, I think in 2000 while he
worked for O'Neil. Bill called him in to see if the report he was looking at
had a typo :-)
What I look for now is a stock rising back up to the 50-day sma and then
failing. Someimes they get back to the 50-day, somtimes they don't. If not
you are left with a puzzle as to pulling the trigger closest to the 50-day
as you can get.
Sometimes I shift to the 200-day if that seems to be the average the stock
is dancing with. I will be watching ISRG to see if it can hold Friday's move
up above the 50-day, same with CROX. GT may have moved into overhead supply.
MA could fail.
On occassion I will find a stock that seems to be having trouble rallying at
all, like AAPL. It is not dancing very close to any average but may fail
right where it is. Same with FSLR.
In general shorting is difficult. Sometimes you get stopped out and have to
wade right back in with the same stock multiple times. With the jobs report,
I was quite surprised to see the market not sell off in the closing hour on
Friday. It is easy to get on the wrong side of a trade. Hope and fear run
rampant in a bear and the volatility confounds at every turn.
Some people can't really short, they can't get their heads around that side
of the market. I know some really good CANSLIMers and shorting just runs
counter to their nature. These people need to sit it out and not let their
emotions get them sucked into trying what they don't have the nature for.
MIke Scott
Tarzana
-----Original Message-----
From: canslim-bounces@???
[mailto:canslim-bounces@???]On Behalf Of Deepak Kapur
Sent: Sunday, February 03, 2008 12:29 PM
To: CANSLIM Stock Investment Group
Subject: Re: [CANSLIM] IBD just looking at IBD 100?
great post, Mike. What are the new shorting ideas? Is it the same list
that you posted last week?
What is your rule for shorting? What sma/ema should the stock
hit/touch/move towards on the upside?
Regards,
Deepak
Mike Scott wrote:
> Ian,
> Follow-through days are only a piece of the puzzle to a new
> sustainable rally. Stocks breaking out of sound bases also has to
> happen. Without stocks breaking out of sound bases the market can't go
> very far, or at least it never has. Another poster said a FTD is just
> a FTD, he is right. Leadership breaking into new high ground from
> sound bases is what makes a rally sustainable.
>
> If you go back to the last bear market you will see many rallies off
> the bottom only to be greeted by fresh selling. One or maybe two of
> those bear market rallies was tradeable. One of those rallies saw the
> NASDAQ rise over 50%. The rest were opportunities to lose money for
> CANSLIM types. I went back and counted the number of follow-through
> days in the last bear recently, I think the count was six or eight on
> the NASDAQ only. I don't remember exactly now. We had days with a plus
> six-percent move on the NASDAQ in 2002. It was volatility to the
> extreme. I don't see anything in the current off-the-bottom move that
> is any different than what we experinced in 2001 and 2002. Most of the
> stocks on the IBD-100 are old tired prior leaders with broken bases.
> The bizare FTD that you mentioned also showed very little leadership
> with sound bases. No leadership led to a failed rally. The set up back
> then was better than now. Be careful.
>
> What is missing right now is that no discernable leadership has
> appeared. What that is moving, is off the bottom. People can make
> money there. There are many kinds of investing and being nimble with
> off-the-bottom rallies is one way. It isn't CANSLIM but so what. Go
> for it if you know how to do it. For example puting your money in
> housing or Citibank (C) a week or so ago could have made you some
> money. That kind of investing requires a different discipline and set
> of rules to live by.
>
> We on this group are CANSLIM investors and so here we are mostly in
> cash except for those who are adept at shorting. My focus will remain
> on the IBD100 and the 85-85 lists waiting for leadership to form up. I
> can't see any yet. When it does those stocks will appear on those
> places. I don't have a crystal ball but I am not expecting that to
> happen until next fall. It could be wore than that as the entire
> banking system could fail as well as the fiat paper money system. I
> lived through the last bear and I remember getting sucked in when I
> shouldn't too many times. I may enter a bear market rally if something
> sets up. Until then my shorting watch list is quite full waiting for
> proper set ups to form. They set up with rallies just like the one we
> are having.
>
>
> Mike Scott
>
> Tarzana, CA
>
> -----Original Message-----
> *From:* canslim-bounces@???
> [mailto:canslim-bounces@???]*On Behalf Of *IAN
> ST. MARTIN
> *Sent:* Sunday, February 03, 2008 11:36 AM
> *To:* Canslim@???
> *Subject:* [CANSLIM] IBD just looking at IBD 100?
>
> Last November when IBD declared a bizarre FTD, the only thing that
> went up was the IBD 100. It seemed to me to be quite a change of
> course for them, somewhat ignoring the major indices.
>
> Now, they only seem to be looking for strength in the IBD 100, and
> not finding it, and ignoring index surges this past week.
>
> But wasn't the isolated IBD 100 strength late last year just a
> case of a very thin market - the vast majority of names were
> downtrending or flat, with just a small number of momentum names
> putting in a blowoff top?
>
> And don't new bulls have their own new stocks - so wouldn't it
> make sense that the IBD 100 is weak, even if last week really did
> see a tepid 8th day FTD?
>
> Opinions?
>
> ------------------------------------------------------------------------
>
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