6 Shorts To Avoid

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I hesitate to write this, but it could be weeks before we see another hearty selloff. Perhaps many weeks.

Listen, there’s not a soul on this planet that enjoys a market plunge more than I do. However, the rapid descent of the market has a flip side to it, which is that the “healing” process required to put prices at appealing shorting levels again can be slow and grinding. After all, the bulls are scared witless during such a plunge, so they are going to be hesitant, cautious and very measured when they resume buying.

Never Again

This varies from sector to sector, of course, but what I’ve done below is take a sample of six stocks that I was short (prior to covering them late last week) to show just how far away they are from resistance (that is, a good shorting price). As happy as I was to be short these before, I wouldn’t dare short them at present price levels, because they are miles away from what I would consider a logical stop-loss point.

Of course, one other possibility is that these companies are in such trouble that they simple resume their plunge and don’t even bother trying to “re-capture” those higher prices. But I wanted to show you some extreme examples to illustrate that even a multi-week rise in equity prices does not necessarily indicate that the first two weeks in October were meaningless.

Packaging Corp of America (NYSE:PKG)

6 Shorts To Avoid

Packaging Corp of America

Potlatch Corporation (NASDAQ:PCH)

6 Shorts To Avoid

Potlatch Corporation

Masco Corporation (NYSE:MAS)

6 Shorts To Avoid

Masco Corporation

International Paper Company (NYSE:IP)

6 Shorts To Avoid

International Paper Company

Huntsman Corporation (NYSE:HUN)

6 Shorts To Avoid

Huntsman Corporation

Eastman Chemical Company (NYSE:EMN)

6 Shorts To Avoid

Eastman Chemical Company

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