Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Monday, March 06, 2006

Top 10 Shorting Opportunities on MSW in 2005

MSW follows the trend and isn’t shy from covering stocks that I feel will drop in price. Late last winter (2004-2005), I turned bearish and started to cover stocks that I felt would drop in price and present us with shorting opportunities. I am bullish by nature as are most humans but I am also in the market to make money so I must follow the path of least resistance. The table inserted in this blog post shows us the top shorting opportunities on MSW in 2005.

You will notice that we stopped covering our short stocks at the end of April 2005, precisely the time that many of these stocks bottomed before starting to move higher. I am not taking credit for calling the market low but my NH-NL ratio started to change direction so I quickly changed my perspective. The NH-NL ratio nailed this low on its head!

The week ending on 4/30/05 had a NH-NL ratio list that looked like this:
Monday showed a ratio of 92-142
Tuesday showed a ratio of 76-204
Wednesday showed a ratio of 64-296
Thursday showed a ratio of 66-336
Friday showed a ratio of 68-341

The following week (5/7/05), the week I started to turn from bearish to bullish looked like this:
Monday showed a ratio of 105-176
Tuesday showed a ratio of 97-159
Wednesday showed a ratio of 128-121
Thursday showed a ratio of 152-85
Friday showed a ratio of 141-106

I also started the 5/7/05 weekly screen with this quote:
“Last week we highlighted a “sea of red flags” while this week we will highlight stocks that are showing solid relative strength versus their peers and the rest of the market. Typically, stocks that show the strongest characteristics and relative strength during corrections, bear markets and sideways markets, are usually the stocks to lead the next rally.”

Stocks that were making screens at this time were HANS, CBG and TS and they all became leaders.

My three prime tools for conveying market direction are:
1. Price and Volume of the Major Indexes
2. NH-NL Ratio
3. Behavior of Individual Stock Market Leaders



Piranha

2 Comments:

At 2:02 AM, Anonymous Anonymous said...

where can you find the daily NH-NL ratios? Thanks

RC

 
At 7:33 AM, Blogger Chris Perruna said...

I get them from Investor's Business Daily (stockcharts.com also has their own lists among other free sites).

 

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