Short Interest Rises

I love how some leaders and analysts love to say that we are not in a recession. They often want the market to meet very strict criteria before they officially define it as a recession. However, many of us don't need a definition to tell us how bad things feel. The thing I tell people is if you don't like it set yourself up to fight back. The way to fight back is to make sure that you can profit when the market is up and also more importantly when the market is also down.

We have discussed a number of times that shorting stocks is not easy because I think it goes against peoples natural instinct. I find it very hard to root or bet for something to go down. But again you have to be very disciplined as an investor and take your emotions out of it. You have rarely seen me recommend shorting stock but I think this is a strategy that is too important to miss out on.

I found this article this weekend and even traded emails on a few of the stocks mentioned in the article with other investors as recently as this morning. I want you to look at one of my favorite stock research websites, Seeking Alpha, and examine the following stocks mentioned in this article: http://seekingalpha.com/article/84613-nyse-short-interest-hits-record-highs-again?source=wl_sidebar

My goal is to keep this short so here is how to get better at shorting stocks.

~ Follow the market and recognize when every is feeling bad about stocks

~ Trade on information that acts as a catalyst. The article above or the approach I took when I shorted Zhone Technologies on bad news are examples of catalysts that could trigger selling

~ Set limits and walk away with positive gains.

Now I hate reading something and not acting on it right away but who knows one day I may grow some balls. I have been vocal that I think the financials suck and if you would have SHORTED the financials on this list as of today you would have seen the following percentage declines:

ZION -23.20%

WM -34.75%

MBI 2.31% This would have been the only stock to lose you money today.

ETFC -9.56%

FHN -24.78%

AVB -3.53%

NCC -14.71%

MTG -5.30%

HBAN -17.20%

I will wrap up by saying keep it simple, follow the money and use important indicators like what we found here to assist you no matter what direction the market is in. REMEMBER, you are betting stops will drop so these negative signs are your friend. I'm out! And even though I didn't get to buy these guys all today my previous recommendations on shorting Financials through ETF's SKF and SEF have come through in a big way.