Debrief: 20 Sells/Short Sales This Past Week

I have concluded my tabulations for the change in price this week of the 20 Sells/Short Sales I presented last weekend on the basis of their daily chart negative divergence SELL signal each possessed at that time. I used the closing price going into last weekend as the constant by which each day's closing price this week was compared. 


My stated hypothesis was: "My expectation is that the majority of these ticker symbols will indeed be lower this week. And I think there is a fairly good chance that nearly ALL of them will be lower".


I have reproduced the chart with detailed data from this week's activity below. 


The SP-500 closed last Friday at $1,344.90 - and today (5 trading days later) at $1,342.64. This amounted to a decline in price of $2.26 for the week, or 0.17%. 


As the stock market was essentially flat this week, one could reasonably expect that a random selection of 20 stocks would also be roughly even in the winner and loser columns. 


I'll be the first to point out that a study of just 20 stocks and their price movement in a period of one week is nothing to take very seriously, if at all. In a single week 20 stocks could do absolutely anything - including all close green or all close red. I make no pretense that these results are somehow conclusive, as that would be incredibly naive. And I will suggest the likelihood that institutional size investors have access to this kind of data based on years of data, not a single week, and are far more aware of the odds/probabilities of price movement based on momentum than I ever will be.


Having said that, and having personally looked at this kind of stuff for many years using the True Strength Index (TSI) indicator, this data is very consistent with my expectations. 


First, I expected the majority, if not nearly all of the 20, would be lower at the end of this week. 15/20 (75%) were indeed lower. This, in a market that - remember - fell only 0.17%. If the market had not been flat in the past 5 days I would have expected the blood to exceed 75% significantly.


Second, it did not surprise me that the SP-500 index stocks have not yet reacted to the TSI negative divergence because the index has sustained them. My hunch is that these 20 stocks will be among the hardest hit when the SP-500 really starts to drop.


Third, the significant movers in the group (XIV, INDL, YINN, PLTM, SWC, DRN and COPX) were all to the downside. There were no significant movers in the group to the upside. The largest upside move was less than 1% - nothing that would devastate a short trader using this strategy.


Fourth, the movers were the very issues that have a higher volatility than average - the leveraged ETFs and the miners. The upshot I take from this is that the negative divergence signal pays handsomely when the issue involved is volatile to start with. 


Fifth and finally, I do not regard the TSI divergence signal - positive or negative - as an equal with the TSI trend line break BUY/SELL signal. In this context it does not surprise me that 5/20 stocks drove right up through their negative divergence signal in a flat market and closed higher this week than last. 


There is no magic indicator or signal that works all the time. But one can learn how to use the TSI to put the odds in their favor - accept the losses that inevitably will occur either due to inexperience, poor judgement or dumb luck, while properly managing position size and risk - and beat the market very consistently over time. 

20 Shorts/SELLS for the Week of February 6 - 10
	Ticker Symbol	Friday’s   Close	Monday	Tuesday	Wednesday	Thursday	Friday	Change this Week
1.	ALL	$30.69	$30.63	$30.84	$31.00	$30.91	$30.97	0.91%
2.	AMD	$7.08	$6.92	$7.13	$7.25	$7.24	$7.05	0.42%
3.	AZO	$353.18	$350.76	$350.48	$349.15	$354.04	$354.10	0.26%
4.	BAX	$57.04	$57.11	$57.02	$57.07	$56.80	$56.84	0.35%
5.	BEN	$116.41	$116.22	$116.74	$116.70	$116.85	$116.10	0.27%
6.	BIG	$43.59	$43.48	$43.91	$43.98	$43.84	$44.00	0.94%
7.	BXP	$107.57	$107.25	$106.30	$106.00	$104.74	$103.78	3.52%
8.	COPX	$15.78	$15.59	$15.28	$15.30	$15.47	$14.98	5.01%
9.	DBC	$28.32	$28.46	$28.44	$28.57	$28.72	$28.45	0.46%
10.	DRN	$66.64	$65.89	$65.58	$65.92	$64.36	$62.48	6.24%
11.	ICF	$76.36	$76.02	$76.00	$76.05	$75.40	$74.69	2.19%
12.	INDL	$31.53	$30.59	$29.46	$29.66	$30.32	$28.61	9.26%
13.	MFN	$14.91	$14.83	$14.82	$14.71	$14.83	$14.91	0.00%
14.	NCMGY	$36.83	$36.29	$36.42	$35.80	$36.11	$35.80	2.80%
15.	PLTM	$21.33	$21.05	$20.90	$20.75	$20.67	$19.82	7.08%
16.	SEA	$17.51	$17.60	$17.64	$17.66	$17.53	$17.29	1.26%
17.	SWC	$14.37	$14.07	$13.82	$13.95	$13.95	$13.36	7.03%
18.	URE	$60.68	$60.11	$59.98	$59.95	$59.15	$58.21	3.41%
19.	XIV	$9.50	$9.61	$9.50	$9.28	$8.82	$8.08	14.95%
20.	YINN	$24.97	$25.20	$23.56	$24.80	$25.40	$23.81	8.65%
			15/20 = 75% NYSE 57%	13/20 = 65% NYSE 42%	13/20 = 65% NYSE 41%	15/20 = 75% NYSE 50%	15/20 = 75% NYSE 73%

Have a great weekend!