Pascal
02-09-2015, 03:20 AM
I want here to compare two short ideas that both look interesting using the Pyramid data.
Genesco (GCO) is an apparel store, while ARUN is a cloud computing company.
Both are in downtrend, in a weak sector and show a very negative LEV pattern.
It is also interesting to see that shorting a bounce seems to provide goo stats returns for both.
Let's move down to the second Table for GCO.
28344
28345
28343
This Table below shows that the positive R/R ratio only occurs on a short at 3% above the 5MA, but as soon as you drop down to 2.5%, then the trade starts to lose money. This means that the stock is sensitive to small price variations, most probably because in trades only 177,000 shares per day. This means that the smallest activity by one single fund could push the stock up or down very easily. The very negative EV pattern shows that at least one large fund is selling here, but is this a sign that the price will collapse? The best here is to really focus on extreme price moves. But anyway, the Breakout Calculator shows that this short trade is risky, because sensitive to tiny execution mistakes.
28342
On the other hand, ARUN trades about two million shares a day and hence is less prone to price variations that might be due to a single fund.
28348
28350
28347
We can see below that for ARUN, we have more flexibility on the short entry price: we can short on a bounce between 2% and 3.5% above the 5MA.
28346
More over, we can see below that keeping ARUN for a longer period of time than five days increase the trade returns. This means that a short on ARUN would be easier to enter AND to hold.
28349
Genesco (GCO) is an apparel store, while ARUN is a cloud computing company.
Both are in downtrend, in a weak sector and show a very negative LEV pattern.
It is also interesting to see that shorting a bounce seems to provide goo stats returns for both.
Let's move down to the second Table for GCO.
28344
28345
28343
This Table below shows that the positive R/R ratio only occurs on a short at 3% above the 5MA, but as soon as you drop down to 2.5%, then the trade starts to lose money. This means that the stock is sensitive to small price variations, most probably because in trades only 177,000 shares per day. This means that the smallest activity by one single fund could push the stock up or down very easily. The very negative EV pattern shows that at least one large fund is selling here, but is this a sign that the price will collapse? The best here is to really focus on extreme price moves. But anyway, the Breakout Calculator shows that this short trade is risky, because sensitive to tiny execution mistakes.
28342
On the other hand, ARUN trades about two million shares a day and hence is less prone to price variations that might be due to a single fund.
28348
28350
28347
We can see below that for ARUN, we have more flexibility on the short entry price: we can short on a bounce between 2% and 3.5% above the 5MA.
28346
More over, we can see below that keeping ARUN for a longer period of time than five days increase the trade returns. This means that a short on ARUN would be easier to enter AND to hold.
28349