I was quite shocked to see that we actually had a new short, after we had that very bullish final five minutes to the stock market session. I am not sure about the “exact” numbers but I watched the market go from red to up 1% in most indexes in a matter of five to ten minutes. I have to admit that was an exciting rally and it came with volume picking up and leading sectors that are in the top 25% of IBD industry groups based on six-month price performance moving higher. The higher volume, along with leading stocks moving higher, made me feel that that five-minute move was more bullish than any of the up 6% market days we have had recently. Despite the nice rally, there were still a few stocks in the short scans that could be future shorts if they do the right thing like rally on low volume to a key resistance area and then fail on heavier volume. MKC, ABT, CHD, MATW, SHPGY, DF, MICC, and RAH are the few that were in my scans tonight. But the new short–ACV–had all the makings of a good short. It came with a strong surge in volume, negative BOP, and had a price pattern that is rolling over with price failing right at a key resistance point with a close near or at the LOD. That was almost a perfect storm with just red BOP being the only key ingredient that was missing. Still it is a very good setup for a new short and if this was a raging bear market with huge selling dominating the indexes, I would probably take a very heavy position in the new short. However, we have a market that is moving higher on the short-term, with a few strong longs setting up, and that is enough to keep me from taking any kind of short in size right now. However, the setup is to near-perfect to completely avoid taking as a short so I am definitely going to give it a little poke. However, a little poke is all it deserves as long as the short-term trend is up and recent longs keep working.
new short position: ACV
ACV is breaking down at the 50 day moving average, with the 200 day moving average following behind, on strong volume. Cut your final loss with a close above the 50 day moving average, if the stock does not move lower immediately.
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