Short Opportunities With Russell Reconstitution

The most interesting thing about the market this afternoon is going to be the action in stocks affected by the Russell 2000 (^RUT) index reconstitution. A complete list of the stocks being added and deleted can be found on the Russell Web site.

Some of the thinner stocks on the lists that are making big moves like Travelzoo (TZOO - commentary - Trade Now), Broadwind (BWEN - commentary - Trade Now), OpenTable (OPEN - commentary - Trade Now), Kirkland's (KIRK - commentary - Trade Now), and so on are probably good potential shorts, but I'm having no luck finding borrows on most of these.

Be especially careful chasing additions on those lists today. In fact, I'm selling down any longs I have that are Russell adds into strength today. There will be some big blocks traded right at the close in these stocks but they can be some very breathtaking swings. This market has seen a lot of program trading in the past month and the RUT stuff is ideal for the machines to push around.

At the time of publication, DePorre had no positions in the stocks mentioned.

Please note that due to factors including low market capitalization and/or insufficient public float, we consider Travelzoo and Kirkland's to be small-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

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Know What You Own: Broadwind is a diversified machinery company; similar companies include Illinois ToolWorks (ITW - commentary - Trade Now), Kubota (KUB - commentary - Trade Now) and ITT (ITT - commentary - Trade Now). For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.

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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.