I received an email asking why I would wish to buy what is rising and making new highs and sell what is falling making new lows. In response I offer the following 4 case studies in an attempt to continue to educate ourselves in the field of speculation.


The tape on Crocs (chart above) would permit someone to write a lengthy PhD paper. Yes very easy to say in hindsight. The chart above contains my last comments made Dec 17,07 in a post Gold and Crocs, before I moved on to greener pastures. Do you think I would have had the brains to take my own advice and short it thru $39. Was a move to 10 and below not attractive enough a scenario? The signals not only to get short and STAY short were aplenty. The gap down in early Nov, the break of the bear flag in late Dec, and the continually forging of lower highs and lower lows. I know, you are thinking how could you expect me to short a stock with a product everyone (strangely) loves after it had already dropped from 75 to 39. Didn't I miss the move? I should think this chart, consider it exhibit 1 quashes that argument. Remind me to get my head examined immediately.





The tape on Blue Nile (chart above) shows where I outlined a textbook head and shoulders topping pattern. Readers know I went short NILE as the neckline was violated to the downside only to be shaken loose and stopped out. At the time a reader had emailed asking why I would consider shorting a stock that had already dropped from $105 to $72. In hindsight I should have persevered and been right back on this trade. Consider this chart exhibit 2 in defense of selling what is falling and making new lows.