Many of the short positions I am in have very large topping patterns. One of them I've been watching is ADC Telecommunications (symbol ADCT). I did not get into a short position with it, however.
My rationale was that the stock had already fallen quite a lot already from its recovery point, and the risk was too high.
But that's silly………if we're trying to look for stocks that are going to be weak in the future, doesn't it make the most sense to look for stocks that have been weak in the present?
So, as this stock is down something like 11% as I am typing this, it shows the value of this thought. Just as one should not underestimate just how high a stock can go (or how strong it is – – – witness the likes of AMZN or PCLN), one likewise should not underestimate how poorly a stock can perform or how weak it can be. I am not entering a position at this point, but I would not be surprised at all to see this stock much lower by early next year.
