Hey,
Legendary physicist Isaac Newton is best known for his third law of motion, which inspired his famous quotation — "what goes up, must come down."
When Newton first said this in the late 1600s, he obviously wasn't talking about the stock market (which didn't even exist yet)…
But nearly 400 years later, Newton's concept applies perfectly to stocks. In fact, my entire put-trading strategy is based on his idea.
You see, when momentum stocks start raging to the upside … it's only a matter of time before they come crashing back down.
This isn't a possibility, but rather a guarantee. The question isn't if a jacked-up momentum chart will crash, only when it'll happen.
WARNING: Timing is everything! Momentum stocks always crash, but there's no guarantee on the timing of the move. Be careful when shorting strong runners!
There aren't many sure things in the stock market, so I spend much of my time searching for overextended charts to short.
And right now, as the major indexes are surging, I think it's time to start thinking like Isaac Newton and look for some names to short.
Click below and I'll break down a few overextended charts I'm watching this week…
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