Wednesday, August 10, 2005

Some Favorite Shorts

The market seems to be back into "wait and see" mode as crude oil prices reach never-before-seen levels yet the outlook on the economy remains very optimistic. Some long positions I've suggested - KYPH in particular - continue to do well. I thought I'd mention three short positions I currently have that are favorites of mine right now.

First is Lions Gate Entertainment (LGF). I did something here which is normally not advisable - shorting the stock in anticipation of a pattern. In other words, I saw a head & shoulders pattern forming, and I shorted the stock before the pattern was complete. Sometimes this can work against you, as the stock moves away from the pattern and negates it. In this case, I got lucky, and today's drop in the stock pierces the neckline, thus completing the pattern. Based on this, it still has plenty of downside potential (and thus upside for a short).

Next is Apple Computer (AAPL). This has been a huge winner over the past several years, but I think it's run out of gas. I've got a nice clean stop-loss point marked on this chart in case it violates that descending trendline, thus negating the recommendation.

And lastly, Helmerich & Payne (HP). The vertical ascent of this stock seems to have also run out of steam, and here again we've got a clean, tight stop to minimize risk:

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