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Now is the Perfect Time to Short These Stocks
The art of short-selling is inextricably tied to the direction of the market. If the market has sold off for a number of sessions, then it's risky to short stocks. This is because a reversal from oversold conditions can push many stocks higher and propel heavily-shorted stocks at an even faster pace as short sellers cover their positions. The converse is also true. A market that has been moving upward for an extended period actually sets up a favorable entry point for investors looking to short a stock. Other short sellers may have already been shaken out in the market rebound, and if the market reverses itself from a recent uptrend, then short sellers become emboldened anew to re-visit their favorite targets, creating fresh selling pressure in heavily-shorted stocks. To my mind, the set up for short-sellers is looking better. The recent upward trend, which has seen the S&P 500 tack on more than 100 points since early June, doesn't have much more room to run, in my view. In early August, I warned that a series of challenges are ahead, and the higher the market goes, the greater the chance that these headwinds will have to wreak havoc.... Continue to read.
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