Thread requested by SKC to discuss shorting spikes in Equities....
While you may see the occasional chart which looks like this (low volatility decline) generally I've found the most reliable short returns are only 1-2 days after an up (or at least consolidation) day when looking for downtrend swings.
Basically fade pops on the first sign of intraday weakness and cover or trail very tight into long SL levels.
I was reading today a paper on short interest in (all U.S) stocks and it indicated that the consistent monthly returns to short side generally only come from small (> micro < large) stocks with large short interest ratio, and it's only the highest 1% (~50-60 out of ~5000) of short interest weighted equally which can give this kind of performance. So it seems better (in general) to look for mean reversion to provide short returns in stocks with the trend as a bias/preference mechanism.