CIEN..the next to fall? CIEN is still about $10 - $15 overpriced and after a double bottom its position is precarious. Next week will be the 'sink or swim' week for CIEN. After covering a hunk of CIEN on Friday, I am left with only puts and now I regret I was so precipious to take profits. MERQ, JNPR, ELNT earnings all coming out next week and this could be the "capitulation" and near bottom for these stocks unless CIEN actually 'warns' and its onward to the 'teen years'. We are going to act according to Monday's price moves and we didn't short 'boatloads over the weekend' in anticipation of breakdown. WE leave that to others who will claim they did after something big goes down Monday.
WE decided to be a little cautious and hold a put position to lessen exposure. Shorters are not stupid, they are not going to expose themselves to the unlikely but still 'real' potential for a rally in CIEN and JNPR. Our strategy WILL be to short more on Monday if the pre-market indication shows there are more warnings ahead.
Shorts are not being squeezed just pressed a bit. It used to be that going short was an art form known only by a select few traders, who would dare enter that intimidating area. Now everyone is going short. Magazines after 6 months of shorting, are discussing specific strategies for shorting albeit 1/2 year too late to do much good. With so much shorting going on lately we have gotten to the bottom of the curve where we might be in for a final, strong breakdown and we MIGHT enter a new cycle.
Funny thing is at this new cycle, we would need to hone up our 'long skills' because after a 'glut' of shorting, we will have a rather newish market where going long profitably skills will be required. That sounds easy but in reality, knowing when to exit a long is still very difficult for most traders now in this new epoch. Hopefully this earnings season will give us a 'basketful' of new potential longs to trade over and over again across all STRONG SECTORS. Its going to be exciting and if have to sacrifice those great gains we got on the short side, hopefully we will make it up slowly on the long side... very, very slowly. We are going to lose some along the way, its a necessary evil in a transitional stage that we do, so the best way to trade is simply 'low risk' so even if profits are a bit less, the losses will be controllable. When you are sweating out a position that is high for your risk tolerance, you can't trade right. I've seen it and when positions are in line with your capabilities, you will be able to trade without emotion (or at least without fear)
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