On Shorting Relative Strength. $WTW $SYY $study

-I  am often tempted to short stocks showing relative strength. This can be dangerous and goes against perceived "trading wisdom" . In fact I have blogged before about the importance of relative strength :

                        http://jpotrading.blogspot.com/search/label/relative%20strength

-If I do this I must first wait for relative weakness to manifest itself by, for example, a red 5 minute candle bar that takes out two or three of the previous five minute bars. The exact point of where you go short will depend on the stock, the general market strength, etc, but a valid short is now possible. I show this in the two charts below for $SYY and $WTW .

- The most important thing now is to input your stop-loss order somewhere close to the previous high as shown in the two charts. If you do not do this "horrible" things can happen....imagine not putting the stops in the chart below for $WTW .

$WTW 71.50 Key Pivot

http://www.fool.com/investing/general/2011/05/06/weight-watchers-shares-plunged-what-you-need-to-kn.aspx

-Plan to trade long above 71.50 , short below.

$WTW Shorting it.

-$WTW has been on a tear since last posting results. Yesterday  there was a nice red candle on the daily chart showing  the largest daily loss since last posting results; and this on a day the market was reaching new highs.

-Today it has recoverd most of the loss, but I am betting its a dead cat bounce and shorted at 77.90 close to the opening level of yesterday´s red candle.

Chart Levels $PCLN $CMG $OPEN $ARUN $WTW $DECK $NFLX $HLF $LULU $SBUX