Hudson Highland Group (HHGP)


"Hudson Highland Group, Inc. is a leading provider of permanent recruitment, contract professionals and talent management services worldwide. From single placements to total outsourced solutions, Hudson helps clients achieve greater organizational performance by assessing, recruiting, developing and engaging the best and brightest people for their businesses. The company employs more than 3,600 professionals serving clients and candidates in more than 20 countries." (company website)

HHGP 3-month stock chart

Sell short

Hudson Highland Group took off after reporting earnings at the end of October, peaking in November just above $11. Since then, however, it has been moving steadily downward, recently breaking through the 200-day moving average, which has flattened.

  • Price momentum (PPO) — steadily losing momentum
  • Trend (ADX) — weakened steadily and buying pressure (+DI) and selling pressure (-DI) have been see-sawing
  • Money flow (CMF) — outflow
  • Relative strength (RSI) — dropped from very strong to neutral
  • Volume — has fallen dramatically

Based on technical analysis, MarketEdge calls HHGP a "short candidate" in a "weak downward trend." HHGP was downgraded yesterday.


loss Bottom line
combined lots

Should have left well enough alone! HHGP was looking like a textbook short: repeated failures at tests of 1-month moving average, trading well below 50-day moving average, clear 4-month long downtrend. But! After yesterday's session, in which see-sawed up and down, at one point dipping below the lower Bollinger band, I saw that relative strength (RSI) and stochastic RSI (that gives greater weight to recent activity) were pointing up. "Just to be on the safe side," I thought to lower the activation price for my stop-loss order. In doing so I made two mistakes:

• First, I allowed myself to be spooked by the slight upticks in RSI and StochRSI, failing to appreciate how solid the downtrend still looked. If I had left the stop where it was, the covering buy would not have been triggered this morning and I'd be well position to take advantage of HHGP's poor stock performance.

• Second, If I was going to lower it, I should have really lowered it, say to $15.75. The covering buy would have still been triggered, but it would have locked in a profit instead of a loss. I would then have been able to sell short again if HHGP traded closer to the resistance line.

I'm really quite puzzled by the psychology of short and long positions. Each is essentially a bet that the stock is going to move in a direction that will make you money. The same technical considerations should apply, just in reverse. But in fact, I get far more nervous about a short stock rising than I do about a long stock falling a comparable amount. Consequently, my judgment suffers. Maybe I should just give up on shorts altogether.