Why I'm Selling CSCO Short

The debate between the bottom-callers and the reality players of technical analysis continues, as the bottom callers now do everything they can to justify making the calls, while the stock market continues to clearly act like a market that is making a significant top. Tuesday's 3%-plus declines on heavier volume on all the major indices should clearly signal that the bottom-callers might be a bit too early.

I might not think this if we did not have a five-year bull market. But the facts are the facts, and I am now making money consistently on the short side, where I was once only making money looking for longs -- longs that I can no longer find in my scans. This is not a market you want to buy, when these conditions prevail. Years of experience tells me this.

Keeping with the theme of beloved stocks that are loved by all the "value" players, let's look at some other leading stocks that the value guys love, but the smart money is selling to the dumb money (distribution).

We have already looked at three stocks I am short: Microsoft (MSFT - commentary - Cramer's Take), Google (GOOG - commentary - Cramer's Take) and Apple (AAPL - commentary - Cramer's Take), so now let's look at the rest of the big Nasdaq stocks.

Cisco

Click here for larger image.

Source: TeleChart Gold

Cisco (CSCO - commentary - Cramer's Take) has clearly entered a downtrend that started in November, as the stock gapped below the 50-day moving average (white line) on very strong volume (distribution). Since then the stock has refused to get back above the 50-day moving average (MA), and as long as the stock continues to move lower, I will look to get short CSCO on any low-volume bounce to the 50- or 200-day MAs. This trend is clearly down now. I do not want to be long stocks in downtrends.

---

At time of publication, Hayes was short Mosaic, Potash, Apple, Research in Motion, Microsoft and Google.

Joshua "MauiTrader" Hayes is CEO, president and founder of Big Wave Trading LLC, a Maui, Hawaii-based stock market advisory service. Hayes also runs BigWaveTrading.com, an online stock market commentary and stock selection service for short- and intermediate-term investment strategies using CANSLIM and other strategies. Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. Hayes appreciates your feedback; click here to send him an email.