Speaking of shorting 52 week highs, did that other guy ever cover his MCD short? Gold and Silver stocks strong across the board.
If I had to short this one I would wait for the first pullback after a downtrend was established. Right now, it's still trending up, so by my standards way too early. At the very, very least I would wait for it to close under the previous day's low (with stop above that day's high) and it hasn't done that yet either.
I very much have "technical basis". In fact, most of the time I don't even know the company I'm buying or selling. It's all probability and money management to me. For some reason, I just took the time to check out some of the fundamentals and see if I could gain some insight in that regard.
Agreed, that might reduce the risk a bit. As I see it, there are two trend lines. The long term trend in blue and the short term trend in red (see attached chart). Typically when I've seen uptrends that are this sharp, they are becoming exhausted. Maybe a close below 37 may be in order before shorting. I'm looking for a pullback to the 40 day SMA.
or perhaps, wait until you can draw a down trendline and short the next time it touches, exit if it closes 'too far' above. for another method see the "emini divergence journal" thread. That guy successfully picks tops and bottoms using three indicators.
What possible "technical basis" could you possibly have for shorting a stock that is at a new high? By definition, the stock is in an uptrend. So in my opinion it would be a matter of LUCK if you manage to pick off the high here, just prior to a 20% downmove. A good way to lose money is to short stocks on the new high list, or buy stocks on the new low list, unless you know something about the fundamentals that no one else does. It's clear here that you don't. Maybe it's your lucky day this time....but make no mistake, it will simply be luck. OldTrader
The technical basis is a standard deviation from a centered moving average. This information is extrapolated to a certain degree as you know. I also use it in conjunction with an ADX with high readings. I like to wait for the ADX to turn around and it appears as if the ADX is going to form a double top. I never said that this method was going to pick the absolute top, but so far for me it's been doing a relatively good job. I haven't had any nasty losers. I am, however, still trading small as I have another system I like to use for shorter term trades so I'm keeping capital free for that. I'll agree with you that this stock does look very strong and hasn't shown any signs of exhaustion and buying 52-week lows and shorting 52-week highs is a losing proposition. It just so happened that this particular security hit a 52-week high at the time it was flagged by my scan. It was not flagged because it hit a 52-week high. I'll have to go back through my logs, but I don't believe I've shorted anything on the 52-week high. I understand that the 52-week high can have some psychological significance. I'll watch this one from the sidelines and see how we end up. I appreciate all of the feedback ... it's been fun and more importantly, educational.
Well, as a guy who bought most of his NEM at 25, I can say that this sure has been fun. At the same time, I have slowly been cycling out of the bigger producers and into the more small (micro) cap gold stocks. If the cost of production is under 300 oz. I want nothing to do with it. I really want stuff where cost of production is 320+ oz. So far, the strategy has been working. I am almost all out of NEM now, just a few hundred left. I have been cycling that cash into stuff like NXG (I mean small cap). At one point, gold/silver stocks were 40% of my assets (march april). Now that is much lower at around 25% (even after huge runs b/c I have reduced them). Your short position does not really make much sense to me, but I wouldn't be a buyer up here either. It is probably best to let it come back into the low 30's to rebuy. That is what I intend to do (but I am holding my weenies). I think that within 18 months, we see gold at 450 oz and silver around 7.5 oz. Good luck.