I mentioned this on the message boards earlier: I shorted AK Steel (NYSE: AKS) at $16.02 today. It has an Altman Z-Score in the distress zone, it faces headwinds with higher input (coal and iron ore) costs, and it looks technically weak as well.
AKS and its 50 DMA
A Short Screen member referred me recently to William O’Neil’s book on short selling. I perused the book in Barnes & Noble a couple of days ago, and this looks like the sort of chart O’Neil likes to short, with the stock trying and failing a few times to stay above its 50 day moving average. He probably would have shorted this at $22 though. Unfortunately, this stock wasn’t on my watch list then. Hopefully, I’ll still be able to make money here.
If not, I’ve got a buy stop limit order in. One tip O’Neil offered in his book was to use fairly tight stops when shorting, so you can be wrong (or early) more often than you are right and still make money (e.g. if you aim for 20%-30% gains on shorts and limit losses to single digits).
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