With that said, rather than betting against the index which in this era is a fool's game since 7 out of 10 morning's the market is marked up 0.3% to 0.4% (meaning you lose immediately) I will begin to focus more on individual names. Index shorts can only work on heavy volume days since light volume in this era means the market goes up or sideways...
I am going add a few positions today purely for technical reasons... first up will be American Superconductor (AMSC) which is a stock we actually have held on the long side a few times including as recently as 2 weeks ago. I was fortunate to sell out of the position as it was stuck below the 200 day moving average, and not partaking in the party - just before it fell off a cliff. It has now rebounded back to some early resistance which lets us in at a decent risk/reward entry point. I will short with a 3% allocation around $30.50. If the stock gets over $32.00 we'll cover, which would be a 5% loss. I'd like to target something near $28 to the downside which would be an 8% gain.
Next, a 2% short allocation into Athenahealth (ATHN) which is suffering from some potential 'accounting issues' - the lawyers have pounded so perhaps the bad news is already in the stock. But again for technical reasons ... the stock plunged a few days ago and has now rallied back to just under the 200 day moving average. With an entry near $38.75, we can give ourselves some leeway and stop loss around $40ish which would be a 3% loss. If the stock jumps back over the 200 day moving average - so be it, it will signify the stock has its advocates back. Otherwise, it might suffer a bit under a cloud of uncertainty.
I'm looking for some other candidates as we speak.... here is one I wish I caught about 75 minutes ago.
Short AMSC, ATHN in fund; no personal position
