The Death Cross

From time to time, people ask me why I like to sell short stocks. It’s simple – I want to be able to make money regardless of the direction of the market, interest rates or the dollar. Period.

We all make money “Buying Low” and Selling High”. I just believe that you can do it in any order that you choose.

Have I made money? I have and when you look at today’s market conditions -- the plunging dollar, soaring unemployment, record home foreclosures, uncontrolled government spending and massive consumer debt -- I’m confident we can improve on those results.

One of the screens that I use from time to time is called the “Death Cross”. This set up is simple – all you need is 2 moving averages – one long term and one short term. Some folks use the 50 and 200 day moving averages. I like the 18 and 50 day moving averages.

You get a death cross signal when the shorter term average moves under the longer term average. If you get heavy volume to accompany this, you have a pretty nice trade on your hands.

Be forewarned. This strategy is not for everyone and it is not a long term trade. I normally hold my shorts for a week or two at the most.

So the next time you are looking at your charts or hear a company reporting less than positive results – take a gander at the moving averages. You may have a nice trade on your hands.

Until Next Time,

RAC
The Intelligent Trader