Fool's Gold for Texas Instrument Shorts

This column was originally published on RealMoney on Dec. 12 at 7:55 a.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

It was the perfect short. Texas Instruments (TXN Quote) simply had everything bad happen all at once with its midquarter update: big inventory overhang, fall-off in demand, downward revision, particularly on the most important high end.

There was not a single positive about it -- a short-seller's dream. What I used to be most proud of was when I was able to nail one of these without a lot of capital, perhaps playing it with delicious December 30 puts.

But as you watched the trading when the news came out, you knew you were hung if you were short. The stock dropped 4 cents -- 4 cents, for heaven's sake! -- and then it stopped dropping entirely. Shorts smelled an upgrade and they got it with a vengeance -- a JP Morgan call saying the worst is over. ...