As of 09/28/2022
  Indus: 29,684 +548.75 +1.9%  
  Trans: 12,457 +303.78 +2.5%  
  Utils: 945 +10.61 +1.1%  
  Nasdaq: 11,052 +222.14 +2.1%  
  S&P 500: 3,719 +71.75 +2.0%  
YTD
-18.3%  
-24.4%  
-3.7%  
-29.4%  
-22.0%  
  Targets    Overview: 09/15/2022  
  Up arrow32,000 or 29,200 by 10/15/2022
  Up arrow13,800 or 11,800 by 10/15/2022
  Up arrow990 or 900 by 10/15/2022
  Up arrow11,975 or 10,700 by 10/15/2022
  Up arrow3,800 or 3,500 by 10/15/2022
CPI (updated daily): Arrows on 9/28/22
As of 09/28/2022
  Indus: 29,684 +548.75 +1.9%  
  Trans: 12,457 +303.78 +2.5%  
  Utils: 945 +10.61 +1.1%  
  Nasdaq: 11,052 +222.14 +2.1%  
  S&P 500: 3,719 +71.75 +2.0%  
YTD
-18.3%  
-24.4%  
-3.7%  
-29.4%  
-22.0%  
  Targets    Overview: 09/15/2022  
  Up arrow32,000 or 29,200 by 10/15/2022
  Up arrow13,800 or 11,800 by 10/15/2022
  Up arrow990 or 900 by 10/15/2022
  Up arrow11,975 or 10,700 by 10/15/2022
  Up arrow3,800 or 3,500 by 10/15/2022
CPI (updated daily): Arrows on 9/28/22

Bulkowski's 8 Tips for Shorting Stocks

This article is based on information from Stan Weinstein's Secrets For Profiting in Bull and Bear Markets, of which I show a picture on the right.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

$ $ $

 

Tips for Shorting Stocks: Do Not Short When...

First, let's talk about what not to do.

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8 Tips for Shorting Stocks

If the above list is what you should not do, how do you short a stock?

  1. Short Stage 4 stocks. When a stock is in stage 3, price moves horizontally. A trendline drawn beneath the minor lows will outline support. The 30-week simple moving average will be climbing up to meet the stock. When price closes below the horizontal (or nearly so) trendline such that it's clear support has been pierced then consider shorting the stock. If a pullback occurs, then you can initiate a short position once the pullback to support completes and it's obvious that the stock is again heading lower.
  2. Short in a bear or weak market. If the market is rising like oil gushing from a ruptured oil line in the Gulf of Mexico, avoid shorting stocks unless the situation is compelling. If the market is trending downward (bear market) or stocks are especially weak, then that's the time to short.
  3. Short weak sectors. You can use relative strength to compare industries. Since stocks in hot industries can continue moving up, look for industries that are especially weak and select stocks from those.
  4. Relative strength should be trending lower. The stock compared to the market index should be trending lower, meaning the relative strength of the stock should show weakness.
  5. The stock should be below the 30-week moving average, and other stocks in the same industry should also be weak (below their 30-week moving averages).
  6. Look for a significant run up. If there is little to reverse, then don't take the short ("the bigger the top, the bigger the drop"). The ideal stock should have an extended uphill run that is now in the process of reversing.
  7. Look for underlying support. If support is nearby then this stock is not an ideal short candidate. Look for stocks which show sparse underlying support as they make their way to the top.
  8. If a head-and-shoulders top or other reversal pattern appears, that's good. Look for bearish chart patterns to bolster your confidence about picking a winner.

-- Thomas Bulkowski

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See Also

 

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My novels:  Bedroom to Boardroom book Remember Me book Bumper's Story book Head's Law book
My stock market books:  Chart Patterns: After the Buy Getting Started in Chart Patterns 2nd edition book Trading Basics book Fundamental Analysis and Position Trading book Swing and Day Trading book Encyclopedia of chart patterns book Encyclopedia of Chart Patterns 3rd Edition book Trading classic chart patterns book

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