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abbo



Joined: 12 Sep 2004
Posts: 148
Location: australia

PostPosted: Mon Sep 20, 2004 7:56 pm    Post subject: Shorting Reply with quote

Steve, I hope this post helps in getting some dialogue going on the forum.
I have not operated short selling strategies in the market however I expect you suffer a loss on capital due to interest charges to your shorting account. In effect this would be similar to time decay in premium for option trading from the long side and could become a significant cost if your strategy does not see a price fall in a reasonable time frame.
I would be interested to hear how you handle a short trade if you are not given a definite "signal" to exit and the stock simply waffles or slowly declines in price.
I appreciate the vague generalities of of this question but I am trying to get a feel of the thought processes you use to manage these indecisive situations. Do you set time and price limits to force an exit or are there any other tricks to the trade?
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candlestick1
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Joined: 27 Jun 2004
Posts: 503
Location: Houston, Texas

PostPosted: Mon Sep 20, 2004 10:19 pm    Post subject: shorting Reply with quote

Interest on a margin account, whether long or short , should not even be a consideration of placing or not placing a trade. The point of the candlestick signals is to show what the current sentiment is in a trend of a stock. That means it should have been analyzed as a position that has the potential to decline at least 10% IN THE NEAR TERM, 3 TO 10 TRADING DAYS. if during that period, the downtrend seems to stall, the apppearance of non-weak formations, and the stochastics get into the oversold area without too much downside movement in the price, then the decision should be to get out of the position and find something else that has a higher probability potential. If the prices flattens and waffles, pretty soon the stochastics will start indicating whether the downside still
has good potential. At some point out in the near future, the trajectory of the downtrend will reveal whether the risk of remaining short is good. Fortunately, the downside moves are usually a little more frorceful and will occur quicker. No matter, the interest is usually so little compared to what the magnitude of the relatively short term move should be, it should not effect the decision of when to close.
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Ron
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PostPosted: Tue Sep 21, 2004 12:39 pm    Post subject: short Reply with quote

I shorted JNPR last week on the bearish harami. Today I got stopped out and decided to change direction because of a bullish breakout gap. But I'm not sure if this is a sustained move or is it last gasp buying? Same with semis. I was long last week but got stopped out on the pullback but now I'm long again but it looks like it's stalling. Since there doesn't seem to be weakness yet I'm not shorting any semis. How do you approach this whole thing about direction? I don't mind riding out minor pullbacks if there's sustained upward or downward movement for a week or two or even a month. It's just going one way today and reversing tomorrow that I'm not comfortable with as I'm not a daytrader. Thanks.
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candlestick1
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PostPosted: Tue Sep 21, 2004 12:50 pm    Post subject: shorting Reply with quote

JNPR you did the exact right thing, the pullback signals showed up, and there is no way to know how long they will sell it off. Then the bullish engulfing signal showed the buyers were coming back. Now it has gapped to new highs with no sell signs yet. stay long until you see a sell signal, the stochastics now have juice to let the upside run for a while.

Semi's can rest but right now there is nothing that says the uptrend is slowing
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Ron
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PostPosted: Wed Sep 22, 2004 2:03 pm    Post subject: Reply with quote

The market looks toppy. Should we be looking for shorts or is this a pullback day? How do we pinpoint peaks/troughs?
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candlestick1
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PostPosted: Wed Sep 22, 2004 4:24 pm    Post subject: pullback? Reply with quote

Today closed on the low of the trading day, the NAs did a kicker signal to the downside, the longs should be closed on any further weakness and start adding to the shorts
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PostPosted: Wed Sep 22, 2004 9:04 pm    Post subject: Reply with quote

What's the best sector to short in the coming weeks?
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Ron
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PostPosted: Thu Sep 23, 2004 10:18 am    Post subject: Reply with quote

In your book you mention bonds as a contra indicator. What index do you look at -- bond prices or bond yields?? The 30-yr T-bond price index is bullish but the bond yield index is bearish and looks like it's bottomed. I'm just trying to get a feel for which way the market is headed the next few weeks so I can go with the trend. The S&P has been in a definable range all year. Now it looks like it's reached the upper trend line and should head down for the next few weeks. That's just my simplistic way of looking at it. It could break the upper trend line and turn bullish. I don't have the analytical skills to use Fib levels, Elliott waves etc. Looks like candle signals indicate direction for the next day or two, but what about the next few weeks? Just want your perspective.
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candlestick1
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Joined: 27 Jun 2004
Posts: 503
Location: Houston, Texas

PostPosted: Thu Sep 23, 2004 1:55 pm    Post subject: bond yields Reply with quote

When bond prices go up, that means the yields are going down, a bullish scenario. I have CQG chart service, which is fairly expensive but it shows all trading entities.

If you see the S&P at a resistance level, as seen now, and the candlestick signals giving sell signals, that is as simple an analysis as one meeds. The signals tell you what is really happening at important support and resistance levels.

The kicker signal in the NAS yesterday is also a strong indication that there will be some downward movement in the markets.
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