As Jim Cramer says, bulls make money, bears make money, pigs get slaughtered.  Up until today, I’ve made all my money as a bull.  With the latest lull in the market, it makes it tough to make money as a bull.

So it’s time to learn how to make money as a bear!

I was checking out Jordan Kahn’s “In the Money” blog last night, and he listed a bunch of stocks that he might consider shorting.  I went through each one, looking at the charts and how the technical indicators came together in complete contrast to my current trading strategy.

I came across Chaparral Steel (CHAP), which looked way overbought, with the MACD indicating a reversal off the recent highs of $70.40.  The stochs and the RSI backed up that information.  I also noticed a healthy gap up around March 22 that could get filled.

So last night I formulated that my target price to sell short was $65.07 with a cover around $56 ($56 might be a little optomistic).

This morning I watched the stock run up to $67 (as a rule of thumb, I never buy at the open) and then the energy of the opening run ran out, dropping the price.  I caught it going through $66.03 where I got my short order filled for 50 shares.

Since I sold short, the price dropped $3, leaving me with a gain of about $150 before 11am EST.

Not bad for my first short position. After I get some experience with some short trades, I’ll be able to confidently play both sides of the market, and I won’t have to wait for a bull market to make money.

Be sure to do your own research on any stock tip you get!

Disclosure:  Short CHAP

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