There was a time not long ago in my trading life when I would only want to short stocks that were relatively high in their historic price range. I would seek out items I thought had the "farthest to fall."
This isn't always wise. Strength begets strength (witness BIDU this morning, which is a stock I avoid like the plague) and weakness begets weakness (like ERTS, yesterday). Just because a stock has lost a lot of value doesn't mean it's done sinking. Oftentimes that very weakness is pointing out a core trend in the company's long-term fortunes.
My real-life example this morning is Dean Foods (DF), one of my shorts, which is down over 10% as of this writing. Yesterday, DF was still half of its peak price, but the trend seemed to be a series of lower "scallops." Today's jolt lower seems to continue this pattern. So I'm keeping my eye out for other charts which seem on a long-term downtrend, irrespective of how much they've lost so far.
