hpq

An update on a short position: Radio Shack Corp. (NYSE: RSH), first recommended on August 4, 2009 at a price of $16.13.

Too many retail (and wholesale) electronics stores in the U.S., too many Radio Shack stores, and a likely sales decline for Radio Shack in FY2009 and FY2010 do not bode well for RSH's shares.

An update on two short positions: GameStop Corp. (NYSE: GME), recommended on May 26, 2009 at a price of $26.00, and Telefonica S.A. (NYSE: TEF), recommended on the same day at a price of $61.11.

GameStop: Hold Short. It's still hard to make the case for growth in high-end / sophisticated games amid a slowdown in consumer spending. The era of the 'frugal consumer' is upon us: basic games are in, pricey games are out. Cover Short on a bounce off $20, $17, $15, or $10. Buy/Stop Loss if you sold shares in this company: $33.

An update: a decision to close two short positions - due to the probability of higher-than-expected U.S. GDP growth in Q3/Q4, and the impact that better economic recovery would have on consumer spending.

The two closed positions: Panera Bread (NASDAQ: PNRA), recommended on May 29, 2009 at a price of $52.65, and Cal-Maine Foods (NYSE: CALM), recommended on the same day at a price of $23.21.

Just call it 'one win, one loss' with these two shorts, first recommended on May 13, 2009.

McGraw-Hill Companies (NYSE: MHP). Hold Short, first recommended on May 13, 2009 at a price of $29.89. After flirting with the Buy/Stop Loss at $36, MHP has resumed the predicted path: down. Belt-tightening by states, school districts, and by other education institutions does not bode well for MHP's education publishing wing. Cover Short on a bounce off $20 or $15. Buy/Stop Loss if you were to sell shares in this company: $36.

For the first time in two months, short interest increased on the major exchanges from the May 15 - May 29 period. On the NYSE, the overall number of shorted shares rose 1% to 15.29 billion; Nasdaq short interest rose 3.6% to 6.6 billion shares.

The NYSE short-interest ratio reached 2.7, while the Nasdaq's ratio hit 3.1. The short-interest ratio can be loosely defined as the number of days, at the average daily trading volume, it would take to buy back all shares currently sold short.

This potentially indicates a turning tide toward bearishness after a March-May period that was painful for the short sellers and others maintaining a bearish disposition. With the S&P 500 Index moving back to challenge the 950 area, the bears may becoming a bit more brave. Are we range-bound, do we have further to run, or are we setting up for another correction phase? Share your thoughts in the comments field.

Beth works for The Options News Network (www.ONN.tv), which provides daily stock and options commentary. The above comments are not intended as trading advice.

Investor and trader Mishko Janusevich had a mantra that he used to repeat while outlining the top, new stock shorts that appeared that day, as determined by technical indicators.

He would stand next to the overhead projected stock chart at the front of the trading room, point to the stock chart and recite, "You see this stock? You see that it's dropped $8 in past two days? You think it can't drop any more? SELL THAT STOCK it's dropping more!!"

Short these shares if you can tolerate high-risk and are an experienced investor that does not remove Buy/Stop Losses.

Some contend that shorting stocks is un-American. Hardly. Selling short provides liquidity to the markets, aids in price discovery, and provides an extra check -- some argue the only check -- against ill-conceived business ideas and incompetent executives.

New York Stock Trader Dave Fischer is a short king, and has made most of his money over the past 15 years shorting stocks. His favorite phrase is, "With those fundamentals, that stock can't hang on for long."

Short these shares if you can tolerate high-risk and are an experienced investor that does not remove Buy/Stop Losses.

Every market is a two-sided market, and while the typical investor makes money during bullish phases, experienced investors know how to make money during bearish phases, as well. In fact, many experienced and institutional traders make more money shorting stocks than by going long.

Short these shares if you can tolerate high-risk and are an experienced investor that does not remove Buy / Stop Losses.

The stress tests seem to show that most financials are actually quite healthy.

The market's bullishness gets harder and harder to fight. Now we learn that banks that people were telling me should be shorted aggressively on every lift are actually able to handle things quite fine, thank you very much.

I was concerned about the late moves BB&T (NYSE: BBT) (Cramer's Take) made in real estate at the top, but either the examiners aren't concerned or things have gotten better. I have always been a fan of Capital One (NYSE: COF) (Cramer's Take) and used to own it for Action Alerts PLUS until I got worried about the economy, but it looks like its credit losses are actually holding up rather well and it needs no new capital.

Every market is a two-sided market, and while the typical investor makes money during bullish phases, experienced investors know how to make money during bearish phases, as well. In fact, many experienced and institutional traders make more money shorting stocks than by going long.

Short these shares if you can tolerate high-risk and are an experienced investor that does not remove Buy / Stop Losses.

Washington Post Company (NYSE: WPO) The Post's education segment (Kaplan) has grown revenue nicely, but large-single digit (or worse) revenue declines in the flagship print metropolitan daily newspaper The Washington Post will continue to hurt results in F2009, and probably for longer. Buy / Stop Loss if you were to sell shares in this company: $460.

The PPT is the vaunted Plunge Protection Team, a much derided but often alluded to collusion of the major prime brokerages (Goldman, Morgan, Stanley, Citi) to halt major stock market declines by manipulating the market. It's never been proven, of course. But a firestorm of comments on ZeroHedge and in other places where hardcore (and some institutional traders) gather has zeroed in on the difficulties many have had borrowing shares of the S&P Index (SPY) in order to short the index. The commenters believe this is a result of the PPT holding back shares to stop any shorts that could torpedo the ongoing rally.

There was a strong outcry last year: "Stop the short selling. It's killing the market." Short sellers were blatantly selling short and then "failing to deliver the stock."

So what exactly was happening? First of all, in order to sell short (sell something you don't have) you must first borrow it from someone else. Usually there are willing lenders at large brokerage houses. What you are trying to do is to sell the stock first and replace it a lower price later on (that is if the market goes your way -- down).

Last year we saw traders selling short without first borrowing the stock. Then, when the buy trade to replace it was executed, there was no stock to deliver. Remember, they were supposed to borrow it first. This is called a "fail to deliver" trade. Former SEC commissioner Roel Campos wrote a letter and posted it on the SEC's website saying: "these companies are instead targets of illegal and manipulative trading with intentional failures to deliver used by traders to extract profits as the share price plummets."

Short selling is on the rise on the New York Stock Exchange. It is at its highest level since the collapse of Lehman Brothers. As the S&P 500 rallied 3% from February 27 to March 13, short interest rose 4.2%, up from 3.8% at the end of February.

Short sellers are betting against the market. In a short sale, the investor first sells the stock in the hopes to buy it later at a lower price. First, the seller must borrow the stock from a willing lender. The heaviest short sales have been in Citigroup Inc (NYSE: C), Ford Motor Company (NYSE: F), General Electric Co. (NYSE: GE), American International Group Inc. (NYSE: AIG) and Bank of American Corp NYSE: BAC). Frankly, with AIG, Citigroup and Ford trading under $3.00 its hard to figure out why there is so much short selling in these companies unless the shorts are looking for a total collapse of these firms.

The SEC is charged with investigating potential illegal activities in the securities markets. The SEC is failing to carry out its responsibility when it cones to the collapse of Lehman Brothers last year.

The SEC has in front of them charges of excessively high volumes of "naked" short selling in Lehman shares. A "naked" short sale is one where you sell a stock short without first borrowing the stock from a willing lender.If you do not first borrow the stock you cannot deliver it. This is called a "fail to deliver" trade. Last year 32.8 million shares of Lehman stock were sold but the sellers " failed to deliver" the stock. 32.8 millions shares of "failed to deliver" trades is a staggering amount.

While Ben Bernanke's announcement that the Fed was buying Treasuries and sucking up bad mortgages was the cosmetic reason for financials to soar, an equally compelling reason may have been the massive but little-noted short squeeze that the announcement, combined with large government purchases of stakes in these companies, engendered.