A Little Something for the Scavengers

If you have been patiently waiting to pounce on some shorts, the natural instinct is of course to go after some very extended parts of the market which have surged, like small caps or financials, for example. 

Indeed, those short scalps could easily work over the weekend as a hedge versus existing longs.

But it is also worth considering, in terms of naked or outright shorts, which names not only did not participate in the recent rally to new highs, but also were abysmal. 

Twilio is one such name, a summer favorite for momentum players now at risk of breaking down to fresh lows since its IPO. 

Simply put, we must assume there is a valid reason for TWLO to have been such a dud in recent weeks, when it had every chance to nail the coffin in shorts. Instead, shorts are alive and well here, with a move below $29.60 opening the floodgates. 

Bulls may render the above analysis null and void if they can sustain rotation down to the likes of TWLO. 

But, again, the lagging action was likely happening for a reason all of these weeks. 

As for the rest of the market, we have some selling in individual names as the indices grind up, a scenario which is keeping me from taking on new longs at the moment.