4 timely shorts

I failed to come through yesterday with some timely shorts and will take care
of that today.
I am short near 30 stocks in the fund I run. I am more long
than short making bets on down and out tech stocks that are struggling in a
new advance. The discipline of stops prevents one from experiencing too much
unnecessary pain. Yesterday was a painful day especially for those that are
long tech stocks. The tough month of October is drawing to a close. September
was far better. All the averages have fallen below key inflection points.
NASDAQ has violated its 200-day line. Will October be the month where a bottom
is made once again? It has a habit of making bottoms. It feels more like the
outset of a new bear market then a bottom. What has to happen to neutralize
the bearish tone dominating the consciousness of most players is a powerful
rally that is accompanied by heavy volume and good breath. It would be
exciting and inspiring to see over 2 billion shares traded with 9 to 1
positive breath. That type of action would lighten the bearish grip. Remember
that this bear market just started. Its claws have yet to inflict major
damage. The grip on the hug is tightening so why not mention a few shorts that
are timely.

Hershey Company

(
HSY |
Quote |
Chart |
News |
PowerRating) 55.92

Happy Halloween. I am short candy on
Halloween. Go figure? I mentioned HSY the other day as a timely short when it
traded near 59. Now look at it. I invite you to stare at the chart for a
minute. Just take a close look at the action expressed by the stock over the
last 10,50 and 200 days and what you are looking at is a stock in decline. So
how do you play it? Simply sell shares short on a bounce. It could easily
bounce up to the 58-59 zones. If the decline persists and the stock falls
below 54.80 then short it at that point as well. Pyramid the position at those
two levels. If a stock is in decline then the way to make use of the
instrument to your benefit is to sell it short. Place a protective stop at
61.05.

Johnson & Johnson
(
JNJ |
Quote |
Chart |
News |
PowerRating) 61.44

I have mentioned this nice short a while
ago and am following up to say that it is actually working out quite well.
Look at the chart and see the decline taking shape. The stock peaked on
4/15/05 at 69.99. Now look at it. It trades at 61.44. The equation appears to
favor the dark side. Too bad for those many shareowners that are holding this
good short long. It is on the verge of collapse. It is on the verge of angling
to lower depths. It is getting darker and darker around shares of JNJ. So the
way to benefit from the descent is being short.

Hilton Hotel
(
HLT |
Quote |
Chart |
News |
PowerRating) 19.18

Here is yet another short that was
mentioned a few weeks ago when the decline began. Remember that stocks trade
in stages. That is what all stocks have in common. That is why they are called
common stocks. Because they all trade in stages. When a stock is in decline
sell it short and profit from its demise. HLT along with MAR and HOT are in
decline. Hey I am short my favorite hotel group HOT. Look I love the “W” at
Union Square in Manhattan. In fact I am tempted to throw caution to the wind
and take a new job as a doorman at the “W”. Has to be the best job in the
world. Just go there and hang out in front of that place for an hour any time
during the day. Do it and see what I am talking about. It is a scene. A lovely
scene! Back to HLT and MAR and HOT. I am short each one and am making money
being short each one. That is the truth as it is right now. Those three stocks
trade in decline. That is the stage they are trading in. So be short each one
and use common sense when placing the protective stop. Hotels are out of
favor.

Barnes & Noble
(
BKS |
Quote |
Chart |
News |
PowerRating) 34.29

I am a short books. I am
short candy and books and nice hotels. All things I love and have passion for.
I prefer making money. I am more passionate about that then anything. I am
obsessed not only to make money but also to win. To be on the right side of a
trade. That is my ultimate concern. Being on the right side of the trade means
that I am winning and that is what its all about isn’t it? Well if you are in
a game winning is crucial but knowing how and when to let go no matter is
critical to success. Sometimes a good loss is really a major win. Admit a
mistake early and live to tell about it later. Well getting back to BKS, it is
merely the objective reality of the stock that I am acting on. The action
taken is to sell it short. I sold it in three stages over the last two days.
BKS has broken down. It trades below all key inflection points. It is in
decline after peaking in July at 42.49.It is in decline isn’t it? It is in a
short, intermediate and long term decline. That is what is happening.

This weekend the monthly
market letter will be written. It will be full of important info about 15
stocks long and short. It ought to be delivered on Monday late after noon. By
the way Microsoft announced earnings and disappointed the street because the
area where better growth was expected failed to come through. MSFT will suffer
today as shares drop in spite of the confidence of its executives. They are
fat and happy. Just fat and happy. Steve Jobs is always creating. That is
reflected in the shares of AAPL. I mentioned the other day about placing AAPL
and MSFT side by side and compare the two investments. Forget about the
companies underneath them. Just focus on the pattern of trade each is
expressing and be objective about what you are looking at. What chart would
you rather own? MSFT or AAPL. What do you think about a pair trade being long
AAPL and short MSFT? Just putting 2 cents into that. Now it is time to reflect
as the day begins to unfold. Futures are mixed. They are off their lows. The
market is oversold but any rally short of what was mentioned earlier is
nothing more then a selling chance. That is it in a nutshell. The gist of it.
Now it is time for a nice piping hot cup of herb tea aided a healthy lemon
wedge. I have two trading days left to fix a lousy month. Yes October is
tough. Tough month for me. I would have been better off in cash sitting it
out. Well I am not one to sit out on the side. I am, a player and must be in
the arena, in the game. So quitting and moving to the side even temporarily is
not an option. Why? Simple. You can profit in any market. It is worth taking
stabs at favorable charts. Balance out the shorts and longs. My failure this
month was not being allocated properly and that will be learned from and
worked on. No doubt about that. So putting October behind and looking forward
to a great month in November. The best month of the year.

Jack S.
Rothstein

Rothstein
Investment Advisory Services, Inc.

3600 Chain
Bridge Road, Suite 200

www.jrmoney.com — www.wealthcast.com

Jack Rothstein is the
President of Rothstein Investment Advisory Services, Inc. and is a 20-year
veteran stock trader and a money manager.