Is it time to short again?

There was absolutely no follow through today as the indices closed very weakly. If you take a look at the charts of the major indices, they haven't even made it to the bodies of the big down day candles. There is overwhelming selling pressure right now, which means we may not get a meaningful bounce until the recent lows are retested. So, is it safe to short right now? The indices are still pretty oversold, and there is a chance that this bounce is just getting started. However, I think it might be safe to start probing on the short side for stocks that are not oversold. It doesn't make sense to chase anything that is too far broken down, but if the risk reward ratio is decent, I will start taking some shorts. I've been tinkering with a scan I created with Trade-Ideas that offers up short setups. I'm basically looking for weak stocks breaking down at the 20 or 50 day sma. It gave me these three today.

Websense Inc. (Public, NASDAQ:WBSN)
WBSN looks like it could go either way here depending on the markets mood, but the path of least resistance is down here. It rallied to fill a down gap and backed off at converging resistance. It is back to test converging resistance and the only thing making me iffy on it, is the fact that it is holding above the 20 and 200sma. However, the weekly chart shows that it may be in wave 3 of a much larger correction and if it loses the 20sma here, then it should fall fairly quickly.


Marvell Technology Group Ltd. (Public, NASDAQ:MRVL)
I normally don't post charts of current positions, but MRVL looks like it is still in a good spot for shorting here. This is one where I am paying attention to location much like I described in the Investopedia article noted in the last post. There are two shooting star type candles and a hang man right at the declining 50sma. Add an unfilled gap down and it looks like MRVL is in trouble. If I am wrong, then the stop is not too far away.


j2 Global Communications, Inc. (Public, NASDAQ:JCOM)
JCOM has been trying to rally above it's declining 20sma and hasn't been able to overcome the selling pressure. It is up to test it again and has plenty of room before it would become oversold.
Keep in mind that we may still get a strong bounce, especially if the economic numbers coming up fuel the fire. Prepare for everything and then take what the market presents you.

Good Luck,


Joey