Any trader in this market has realized what kind of money shorts are making beating up all the stocks held by those mutual funds that cannot be sold fast enough. Heavily shorted stocks are about as dangerous as you can get. Shorts as well as “pumpers” will do anything to change the value of the stock. Stocks that have been heavily shorted can be bought up at a very nice discounted rate, but the shorts have to be done with it before real money is to be made. Stock message boards are filled with very false horrible news, and very false buyout rumors. Most investors would never get suckered in by what somebody on a message board said, except for the desperate.

Very popular shorted stocks are bound to up tick after the up tick rule is reinstated. The up tick rule, while highly symbolic, does have its advantages in a bear market.

Sirius XM Satellite Radio (NASDAQ:SIRI) www.TradeKing.com

Any penny stock this low is going to attract bottom bouncers looking to make a quick dollar even they know little about the stocks longevity. SIRI has done a little short shaking in the past few weeks, and has been very fun to watch. There is something of a “Long Revolt” going on trying to raise the stock price by scaring the shorts. As soon as the up-tick rule is reinstated Sirius XM radio is going to do a moon jump. ( NASDAQ:SIRI )

Most heavily shorted stocks are very much tied to the economy, making them a good bet to short right now. Stocks like AMD, Motorola, and GM are all popular short stocks. Stocks like GM, other than the occasional bottom bounce, should be stayed away from completely. The company continues to ask for government money with more and more strings attached. As much as I love my Camaro, and want a new one… Ford is going to leave GM in the dust when the economy picks back up.

All this week we will continue to post specifics on popular shorted stocks that could have a jump, so keep checking back!

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