How to find shorts opportunities:Part1

The market has had a approximately 10% move from its bottom in last 30 trading days before reversing hard. In the last 30 days some stocks have made big moves and some stocks lagged the market. Both of these kind of stocks offer opportunities for short sell. During market corrections or bearish phase stocks which have ran up a lot correct 20 to 25% and laggards start going down. You have short opportunities at both end of the market. You can look for buyer exhaustion setups in stocks that ran up a lot and you can look at breakdowns move in stocks which were under performing during the rally.

The following 100 stocks are top ranked stock by % gains in last 30 days. Stock priced below 5 are eliminated and stocks with less than 100000 average volume in last 4 days are excluded to calculate top 100 list.

ABG

ADCT

AEIS

AFFY

AGCO

AGO

AGU

APC

APL

ARGN

ARNA

ASYS

ATAC

AXL

AXTI

BCS

BID

BUCY

CAGC

CCO

CGA

CLF

CNH

CRUS

CTXS

DCTH

FDML

FOE

FSYS

FUQI

GENZ

GRA

HEAT

HEW

HGRD

HTHT

IDSA

IGTE

INCY

INFN

ING

IOC

IPG

IPGP

ISLN

IVN

JASO

JKS

KRA

LAD

LDK

LFL

LIZ

LLEN

LNCE

MBI

MDCO

MNTA

MOD

MTL

NEWP

NTGR

NTY

NVMI

OEH

ONXX

OPLK

OWW

PCLN

POL

POT

PPCO

PTRY

PWER

RES

ROC

SCMR

SDRL

SFN

SMP

SOLF

SOLR

TEN

THRX

TKR

TKS

TRS

TRW

TSTC

UCTT

UIS

URI

WHX

WLK

XJT

XTXI

YONG

Some leading stocks by price % change in last 30 days are:

ARNA up 109%

JKS up 102%

And you can see more stocks ranked by % change like this...

If you see the above stock IDSA, it has corrected 19% in last 6 days from high. Like this many of the strong stocks will have sharp pullbacks if the market continues its down move. A stock like JKS is vulnerable to 10 to 20% correction (JKS has earnings due on16th so be careful).

Some of these 100 stocks will pullbacks 15 to 255 in next couple of weeks if market continues to go down. They offer opportunities on short side. In a broad based correction all strong stocks are vulnerable to such correction. And in this market we have seen that when things go up everything goes up and when things go down everything goes down. So if you are looking for quick profit short opportunities the 100 stocks above offer you those opportunities. On a list like this you can either run a breakdown scan or a swing exhaustion scan. That way you will get only 5-6 opportunities to work with instead of 100.

To find these 100 stocks using Telechart, you need to be familiar with the "Custom Date Sort" function. Using the "Custom Date Sort" you can sort the "Common Stocks" for the period between July 1st (the lowest point in the rally) and August 9th (the highest point in the rally). July 1st was the bottom of this uptrend. Once you get the sort you need to select Top 100 stocks by % change between those 2 dates. You can also look at Top 200 stocks instead of 100 if you are looking for more opportunities

If you want to use the filters I used to eliminate low priced and low liquidity stocks then you need to first apply the filter and create a Easyscan and then sort the Easyscan list by the Date sort.

Here is a step by step way to do this:

Create a liquidity PCF: MINV3.1 >= 1000 This gives you stocks which had minimum 100k volume in each of the last 3 trading days excluding todays trading day.
Create a Easyscan with following conditions:

Common Stocks
Price per share>5
Liquidity PCF =true

Once you have this list setup go to Custom Date Sort and set sort date as:

Start Date: 07/01/10

End Date: 08/09/10

Select % change

and then run the sort.

This will sort your newly created Easyscan by the % change between those two dates. Select top 100 or 200 stocks from that and create a new watchlist "Rally Leaders". On this list you can use two kinds of scans to further reduce number of opportunities:

Stockbee Breakdown Scan

C <= .96 * C1 AND V >= 1000 AND V > V1

Stockbee Swing Exhaustion Scan

C < C1 AND C1 > C2 AND C2 > C3 AND C1 > O1 AND C2 > O2 AND C3 > O3

Keep an eye on these leaders for breakdown opportunities. If market continues its correction many of them will offer 10 to 25% opportunities.

In second part I will talk about how to find laggard 100 to 200 stocks during this 10% rally and look for short opportunities in them. In Part 3 I will have a video to show you how to do this.

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