Shorting SNDK

Quote from jficquette:

As a general rule:


Try using rsi 2 with values over 99.7 on the daily as point to sell calls or buy puts.

Also don't short cheap stocks EVER, not EVER. Nothing under $40 bucks, $50 is better.

Don't short stocks that are not heavily owned by institutions. Nothing under 90%.

Don't short stocks that are having a basic change in ownership or equity. For instance don't short stocks with Buyout rumours.

Don't short stocks that are making new 5 year highs. You want some type of Resistance somewhere even if you have to go to the Monthlies to find it.

Don't short stocks that are heavily short.

Don't short stocks on the day that they announce blow out earrings, raise in guidance and stock buy back programs in tandem.

Bullish stocks up big due to a reason such as earnings generally end up closing on high. Consider selling otm calls at eod. They will be cheaper the next day even if prices continues up.

On big expansion days up, you can sell the next day if it gets to 1.414 of the expansion days range if it fits all the criteria mention earlier.

The biggest hits I have seen people take are on shorting cheap stocks and not understanding why the stock is up.

Anyone shorting cheap stocks will get hurt badly sooner or later.

The best scenario that I have found is shorting stocks that fit the criteria are those that had earnings after the market close on the prior day, had significant trading after hours the prior day and gap up the current day. Even better is if they have their press conference this morning. Generally you can get your best price during the conference when its going nuts.

John
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Pretty good set of rules, John. Particularly the 90% threshold for institutional satruration.

I'd include seasonality. Institutions trying to play catch up for a lackluster year. Taking the bait.

High short interest is identified prey to the ax. Predictable, especially when over-leveraged. SNDK isn't exceptionally high but it's present.

There is also the notion that one trades against a market maker, NOT insitutions. He/they have an agenda, Generally related to inventory. Just because the ax shorts intra-day (in some cases more than once), doesn't in any way make it a short candidate for retail money. Retail isn't than nimble nor has the luxury of seeing lined up potential order flow. Level II is bells and whistles.

Lastly, the chart I posted reflects BOTH short term money and..............long term money. One glance, it's not a short. Well, at least not for more than chump change.
 
Few more rules for intraday shorts,stock has to open lower than yesterdays price,and it has to be lower than todays opening price,otherwise you are looking for trouble.
 
Couple more things. Don't mess with stocks that don't have options and or low float. This is because they behave differently then high float stocks with heavy option trading.

The worst nightmares are created by shorting cheap stocks with low float with low institutional ownership on market trend days.

My shorting and buying of stocks up/down big has always been just a mean reversion deal for me. I have certain distances the stock has to go for me to get interested. I have based the distances on those that are extreme relative to what is normal moves for the stock.

It really doesn't matter how you come up with it but come up with some measure of movement, either on % up/down or Range on day etc that only occur maybe 1% or less of the time. The 1% is just an example.

So say you want to use % up on day as the metric. Download 200 days of data on that stock and get what the median % up is on up days and then get the Std Dev. If the median is 3% when the stock is up and the Std Dev is say 2% then come up with a threashold that you feel comfortable with. For instance, say 15% up which is 6 std dev etc. If you want to use 7 or 5 std dev then just adjust etc.

Most important though is that you really need the big up/down day to run into some type of resistance/support on the longer time frame charts.

Another gimmick is using options. Go to the option that you are interested in selling and put it on a daily chart. Look for where that option on the daily chart will hit resistance. It generally is a good place to sell.

John
 
Quote from Robert Weinstein:

SNDK has been on a tear during this week.

It also is up nine days in a row and has been up 14 days in a row compared to two days before.

I ran some numbers with Stockfinder and could not find one other stock in the last 650 trading days that. Thats almost three three years worth of searching.

Can SNDK go up again tomorrow? Of course it can but I feel the odds greatly favor a retracement. I am already short and I have traded it for the last two days. The first day went alright and I made some money but I traded it back and forth giving me a closeed out loss but a much greater cost basis.

I believe that provided it does start to move down tomorrow it will spend the majority of the day moving lower. Yes I know there has been some good news out (along with a short recomendation by an analyst ). But as they say stocks peak on good news not bad. I intend to short more and perhaps write some calls as I was looking at the Jan 30s

Something to think about if you want to fade a move higher with a short. Of course do your own work with this one. Like I said I am short so I have a bias and while I took some pain today I think if it goes under 26 in short order (three or four days) it will be well worth it.

Happy Holidays to everyone

Robert
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Seems to me there are a large number of posts trying to justify a short based upon the number of days up in a row a stock is up.... I have never made a trade based on such logic. The question is... where is the resistance. Leave an order just past here to catch the pikers getting stopped and move on to the next stock. There's only 50k others to choose from.
Besides, there's been no panic. This thing isn't ripe yet.
 
why would you ever look for a short in this stock at this level? You missed the boat by many days. Even if the stock pulls back some, your risk reward is fully skewed against you. Dec 3 was the day to go long this beast, and I admit I also missed it. But looking for shorts now simply makes zero sense. Why dont you concede you missed it and move on to other names. On the close of Dec 3 my models show me that the relative outperformance was confirmed and a long was in place. From here I see some correction but there is no reason why SNDK should not continue to outperform the broad market after that. So why would you look for a short in this name and not weaker names thats what escapes me completely.



Quote from Robert Weinstein:

SNDK has been on a tear during this week.

It also is up nine days in a row and has been up 14 days in a row compared to two days before.

I ran some numbers with Stockfinder and could not find one other stock in the last 650 trading days that. Thats almost three three years worth of searching.

Can SNDK go up again tomorrow? Of course it can but I feel the odds greatly favor a retracement. I am already short and I have traded it for the last two days. The first day went alright and I made some money but I traded it back and forth giving me a closeed out loss but a much greater cost basis.

I believe that provided it does start to move down tomorrow it will spend the majority of the day moving lower. Yes I know there has been some good news out (along with a short recomendation by an analyst ). But as they say stocks peak on good news not bad. I intend to short more and perhaps write some calls as I was looking at the Jan 30s

Something to think about if you want to fade a move higher with a short. Of course do your own work with this one. Like I said I am short so I have a bias and while I took some pain today I think if it goes under 26 in short order (three or four days) it will be well worth it.

Happy Holidays to everyone

Robert
More...
 
Next resistance point I see is in the $32-$33 area, but the stock has made new 18-month highs and has been pummeling earnings estimates for the last 4 quarters. They also won't need to do much to crush last years EPS (-1.65) when they roll out their earnings in January.
I'm guessing we'll see a pullback with the general market, but I'd be nimble with my shorts here.
 
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