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Our subscribers knew it in advance:

1) KERX went down 24.3% in 10 days

2) COMS went down 25.1% in 12 days

3) BCRX went down 37.7% in 21 days

5 dos and don’ts in short selling.

1. Do use stops. Period.

2. Do monitor "hot" industries and sectors. Identify fake players, poor competitors, minor companies with too-ambitious goals, fundamentally weak stocks, technical laggards and "pumped" prices. They will eventually give short sellers the opportunity to make a profit.

3. Don’t short stocks with high short ratios or high proportion of short shares vs. float. Chances are you will get "squeezed".

4. Don’t short growth companies and those with good ideas, aggressive research/marketing and solid balance sheets. Remember that good companies will prevail in the long term and good news might be around the corner.

5. Don’t short companies that pay dividends. Consistent dividends create steady prices (a boring situation for traders, unless you play options), counter panic, attract buy-and-hold investors rather than traders, and create resistance to moderately bad news, sector weakness and cyclical variations.