How We Short the Market

February 9, 2014 by  
Filed under News

 

Being successful at buying and selling stocks can be challenging.  But being successful shorting stocks is generally more difficult.  That is why we wait for the right market conditions before attempting it.

 

We only feature shorting setups shortly after a bearish market signal and for maybe a few weeks afterward.  This is the best environment we have found to make money shorting.

 

So when we identified the bearish market signal a week and a half ago, we went to work finding the best shorting setups.  And to do this, we use the same methodology for our long trades – only in reverse.

 

Meaning we find stocks with falling estimates, that have a track record of missing earnings expectations in a bearish price trend.  In the first issue of the Weekly Alert after going bearish on the overall market, we found 2 stocks with these qualities near an ideal shorting entry point:  DDD and TITN.

 

DDD, 3D Systems, is the top 3D printing stock with a very lofty valuation going into the market correction.  The price recently broke a strong short-term uptrend on strong volume when we featured it.  It can be very profitable to catch these high-flying growth stocks just as they are breaking an uptrend on strong volume.

 

Since featuring this short setup, the price has already reached our target cover price.  Subscribers using our targets made a 33% profit within 2 weeks.  And TITN has moved nearly 10% in our favor since being featured with DDD.

 

With a short trade we always put in a stop-loss order right after entering the trade.  And its best if you can both put in the limit order for your target cover price along with the stop-loss.  Check with your online broker to see if they can do this.

 

33% is a big profit within a couple weeks.  During the right market conditions and on the right stocks shorting can be very rewarding.  However, the market is usually in an uptrend where shorting is more difficult.

 

Receive a List of Stocks in bullish and bearish chart patterns.

Comments

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!