Today we took qcor short and I wanted to outline the trade and give you my thoughts.
The thing that I highly recommend, especially for new traders when shorting, is ONLY shorting breakdowns. Never try to short strong stocks and never try to short bounces. Often times we will nail the entry on stocks breaking down in the boom room, the setup works perfectly, we take profits and make money.. yet shortly after I see people in the room start posting that they are resorting bounces in the stock.
This is really tough to do and often times the bounce that you think you shorted is really a reversal in the stock. Its tough to do.. so if you are new I would try and stick to the initial breakdown.. make your profits and move on! Only re-short if there is heavy resistance on the bounce! That is just my two cents and a mistake that I made when starting out.. so thought I would share!
Anyways.. qcor.. we shorted the breakdown at 19.92 and almost immediately the stock dropped to 18.8's.. a one dollar gain off the breakdown. Take a look at the chart and see if you can see the breakdown. Breakdown is just the opposite of a breakout. In a breakout, multiple taps of a resistance level often results in a break of the resistance and a push higher. Thus a breakdown is multiple taps of a support level making it highly probably that the support will eventually crack and the stock falls!
