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Hi Kerry,
Friday, September 24, 2004, 8:51:45 AM, you wrote:
KS> I just ran into this issue with the DAL signal on the Solution
KS> Service. I attempted to enter a short sale and got the above
KS> message. Apparently short selling is not allowed by my broker
KS> for a stock whose last price was $3.57. Does someone with more
KS> experience than me know if this $5 rule is the norm and generally
KS> applied by brokers? I use optionsXpress. Kerry
It's not common in Japan (this place is still kind of the wild, wild
west of investing, in many ways), but I've heard it's common in the
US.
Personally, I would need a fantastic reason to short a stock that
low, probably bordering on inside information that the company is
headed for bankruptcy.
Many people have the idea that shorting is simply the reverse of
going long. It is not. It is a more difficult way to try and
extract money from the market, and the trades will need to be
shepherded differently than the way long trades are managed.
I used to do it a lot, and I'm a *very* good trader, but I hardly
mess with it anymore. Notice I didn't say "never", because there are
always exceptions. But my focus is on ignoring most shorting
"opportunities".
As for Delta . . . it's huge. Do you suppose that it is going to
vanish, or its stock become worthless? Do you have some idea of what
the intrinsic value of the stock is? Sure, it's on a long down
trend, but where was your short order when the stock was still in
double digits? You want to jump on a DAL short *here*??? The market
gets one whiff of good news regarding oil, or a Delta labor
concession, and you are looking at a THIRTY PERCENT GAIN in that
stock, as it tests its 50-day @ around 4.50. Or how about its summer
highs, at around 7 dollars. You want to *short* this???
I'd put my money on red or black, first. ^^_^^
If nothing else, IMO, you want to wait for a rally in this stock, and
short it if and when the rally rolls over. Otherwise, you are
shorting a stock that is scraping along a fairly well defined bottom,
otherwise known as a base, which has persisted for 7 or 8 weeks now.
You know something we don't know? ^_-
I could be wrong of course, but my bet is you will need to be both
very lucky and extremely agile. Good luck in any case. Beware,
there will be quarterly window dressing next week . . .
Best,
Yuki
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