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Market Going Lower, Getting Easier To Short

28 January 2010 No Comment

Finally some tailwinds to my shorting plays versus the headwinds of just about all of 2009.  After breaking north of 10,700 last week, the Dow Jones is now very close to the 10k mark.  Insignificant, but definitely a psychological level.

Good article over at Seeking Alpha about “shorting the double dip” says the following:

What to do? Short the obvious – a continuing fall in national income – start looking at logical shorts based on fundamentals and then check out technicals for the “when.” An important part of those fundamentals are balance sheets. As sales stay stagnant or continue to decline, debt service will increase – if debt can be re-financed – as rates rise. Who needs a boat? Short Brunswick (BC), decent balance sheet, not great. Who needs a high end motorcycle? Short Harley (HOG), totally wrecked balance sheet. Who needs more stuff? Short Macys (M), woeful balance sheet.

The author’s point on using technicals for the “when” is what I failed to do in 2009.  The technicals were bullish and are only now starting to become negative for many stocks.

I have attempted to short Brunswick and Macy’s both last year and this year.  I’m now finally adding to these shorts.

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