by winston » Sun Apr 01, 2012 6:27 am
Risk vs Reward of Short Selling Now
Ken Shreve, a RealMoney contributor and financial markets commentator, says that after the big run-up for the market, he's been playing more defensively than offensively.
"Until I start to see meaningful signs of institutional selling in some of the big leaders -- a name like Apple(AAPL_) for instance -- I'm in no rush to head for the sidelines."
Right now, Shreve is getting mixed signals on underlying market health. Heading into Friday, the broad-based New York Stock Exchange Composite Index showed seven higher-volume declines in recent weeks, which points toward at least some institutional selling, he says. There have been five events of higher-volume selling in the S&P 500 and four in the Nasdaq, he says.
"There is still a bid underneath this market as under-invested fund managers continue to put money to work," Shreve explains.
If the major averages do eventually start to pull back, Shreve is not expecting the selling to be long and drawn out. At this point, a pullback of 5% to 7% from recent highs seems reasonable, according to Shreve.
Source: The Street
It's all about "how much you made when you were right" & "how little you lost when you were wrong"