A friend of mine came up to me two weeks ago asking how to short. I was thinking, you should have asked me that question a month ago. Anyway, I was reading through TraderMike’s blog and came across his very own bullish indicator- he checks to see how many people are searching his site on how to short stocks. This is a contrarian indicator: When people start looking for ways to short, it’s time to go long. It’s amazing how true this is. It seems like majority of investors are late adapters, or maybe I should say “too late adapters.” By the time everyone catches on they’re too late… a classic bear trap. What makes this worse is how shorting works- when you short sell a stock, you have to buy the stock back, which can cause accelerated buying which catupults the stock (best recent example- TravelZoo TZOO)… this is called a short squeeze. Believe me I’ve been in that trap before.
Anyway, since last week I’ve “taken the bear suit off”, but haven’t put on any bull suit yet. In my opinion, we’re at the point where the risks doesn’t favor eitheir side. That “point” really frustrates me… I mean, just look at what happened to the Dow today.
Joined Jul 30, 2008
2,107 Blog Posts
