I mentioned before that compound interest works against short sellers. This is true if the trend continues, but if the stock turns around, it works for your protection. For example, if you short a stock, and it declines 50% in week 1, and rebounds and gains 50% in week 2, you are still profitable by 25%
Also, my Asian stock hedge failed miserably, as this sector did not participate in this week's rally.
The only bright spot was in one of my long position, CVTX, which gapped up 32% on Thursday.
Here are the trades I placed this week:
Sold K.to (was trading below 50dma, other gold stocks look better)
Shorted FST
Sold HBU.to (margin call)
Covered ANSS (stopped out)
Sold MRU/a.to (margin call/stock entered sideways trend)
Sold EWM (relative strength stopped out)
Bought AMZN (breaking out)
Covered FST (broker buy out)
Anyway, here are 2 stocks I scanned today:
After a big rally like we had this week, I like to find stocks that did not participate. My logic is that if a stock cannot rally when the rest of the market is, it must surly be in weak hands.
One theory I have is that when a company is facing serious problems, there are likely many investors on the inside looking to dump their shares before things get even worse.
However, if the shares are dumped on a down day, the excess supply could really crater the stock. So they wait until the market is rallying hard to dump their shares, so that there is some underlying demand to absorb the large positions. The stock could still close down, but not nearly as severely had the market been down that day.
Notice in the above chart that this 52 week low was made on record volume.
