How to Profit From a Stock That's Plunging

On Aug. 28, the shares of four small and medium-size companies plunged more than 20% in a single day on volume at least seven times greater than average.

In the bull market, traders became accustomed to looking at such moves as buying opportunities, playing for a reversal as the cavalry of growth-fund managers rode in to defend their honor. But this is not a bull market, and for the most part, moves of that magnitude have been a red flag of much worse to come. They have become red meat, to be more specific, for the growing legions of quick-trigger short-sellers ready to blast anything that wavers to smithereens.

Four Plungers on Aug. 28 These stocks fell hard on strong volume
Company	% Change	Aug. 28 Close	Aug. 28 Volume	Volume vs. Year Average	Market Cap
j2 Global Communications(JCOM Quote)	-21.58%	$18.71	2.16 million	28.9x	$202 million
HealthSouth(HRC Quote)	-24.74	5.05	42.16 million	15.2x	$2 billion
Semtech(SMTC Quote)	-25.74	14.05	12.33 million	9.6x	$1.1 billion
Culp(CFI Quote)	-35.69	8.65	507,700	7.7x	$99 million

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