Short Picks For 20th Jan

Rumors are swirling over what Palm (PALM) will charge for its new phone, the Pre. Though it seemed Palm was planning to charge over $199 that AT&T and Apple charge for the iPhone, or possibly $399 on Sprint’s network, Palm is tentatively planning to charge $399 or $499 without a contract and $149 or $199 with a contract. The stock has taken a big jump, up 200+% in the last month. Wait for the reversal and the news the die down before shorting it.

MFLX is sitting right at its 200 day moving average (DMA). All indicators point to overbought stock. However 200 DMA holds the key here. If it can break it convincingly, it can keep going higher. Ideal scenerio is to short around 17.4$ area, but put a stop loss to cover above 18$. Its board of directors has approved a share repurchase program for up to 2,250,000 shares which represents approximately 9%. Stock buy backs are not always good since company is burning capital over preserving for weaker times.

AMMD is up last 6 consecutive days and looks to be in an uptrend. Wait for the reversal. Health care related stocks are bit dangerous to short into since fundamentals are with them. Nonetheless overbought stocks are eventually sold making short selling an attractive proposition here.

CYPB shares surged 33 percent after the San Diego-based company and its partner Forest Laboratories Inc. said Wednesday that the Food and Drug Administration approved the fibromyalgia treatment Savella. This is not a stock you want to short. Biotech stocks dont move with the market. They move with FDA approval which is risky business. Stay away.

CECO looks to have broken out of its $21 resistance which would have been double top otherwise. This could possibly be bullish sign. However it has been up 50% in the last 3 months and 10% in the last 5 days. I would wait for the reversal to short into.

SEPR is another bio-tech stock that has been on a high rise. Its has been up 27% in the last month and 11% alone in the last week. This kind of run always need a halt and provides opportunity for scalping on the short side. Notice how after every spike up it has met with a similar spike down. I expect the same. Keep watching. RSI and MFI points to overbought levels.

ARST is up 37% in the last month. Time to short ? Not really. Their Q2 revenues rose 33%. Earnings reached 6 cents per share versus a loss of 3 cents a year prior. Brokerage analysts had forecast the company to break even. Strong earnings is a key indicator of how well the company is doing. Why short a profitable company when there are many crappy ones out there. I will pass this one.

WNR just broke the 200 DMA. Even though indicators show overbought, i wont consider shorting it until it falls back below 200 DMA. Adding to watch list though.

SMBL broke out of its strong 7.5$ resistance as well as the 200 DMA. Its amazing how once it breaks the 200 DMA it stays above it and keeps pushing higher. Adding to watch list for now.

SVU is a retail grocer that is up 37% in the last month. It dropped from 19$ to 16$ range very fast. Now its making its way to 19$ again. If it cant break it, i see it dropping back to lower levels. RSI and MFI both indicate overbought condition. Keep a close eye on this one.

PFWD is another stock marching towards its 200 DMA. Lets see if it breaks it or not.

CONN is a specialty retailer of home appliances and consumer electronics that is up 53% in the last month. How long can this keep going up ? Waiting for 14+ prices to short into. With consumer spending dying down, retailers make for good shorts.

CAL is air carrier engaged in the business of transporting passengers, cargo and mail. It has a beautiful predictable chart. Crazy upswings has followed by wild downswings. Wait for the chart to turn red and watch how it will keep falling. You dont need to catch the exact top, but you can enjoy the ride down. Definitely worthy short candidate.

Disclosure: No positions held in the above stocks.