📉 The 95% Conviction SHORT: Why Smart Money Is Betting Against This $27 Stock

Not every trade is a long. Sometimes the best opportunities are on the downside.

During Monday's DCG Mastermind live call, Jamar dropped a 95% conviction SHORT setup that has the entire trading room paying attention.

The ticker? $KD (Kyndryl Holdings)

And the thesis is brutally simple: this company is fundamentally broken.

The Bear Case (Why This Stock Is Heading Lower)

Current Price: ~$27Target: $25Entry: Below $27Conviction: 95%

Here's what makes this such a high-probability short:

1. Poor Free Cash FlowCompanies that can't generate cash are companies that can't survive. KD's free cash flow metrics are deteriorating, which means they're burning through capital faster than they're making it.

2. Fundamental WeaknessThis isn't a temporary dip. The underlying business model is struggling. Revenue is declining, margins are compressing, and there's no clear catalyst for a turnaround.

3. Declining SalesWhen sales go down quarter after quarter, that's not a "rough patch"—that's a trend. And trends don't reverse without major structural changes (which KD hasn't announced).

4. IT Services Sector Under PressureThe entire IT services space is getting disrupted by AI automation. Companies like KD that rely on legacy service models are getting squeezed from multiple directions.

The Options Play

Recommended Strategy: $27 PutsTimeframe: Give it room to work (30-45 days out)

This gives you:

Defined risk (premium paid)
Leverage on the downside move
No overnight "blow up" risk vs. shorting stock

Why 95% Conviction?

Jamar doesn't throw around 95% conviction ratings on SHORT trades often. Why? Because shorting is inherently riskier than going long (unlimited upside risk).

But when the fundamentals are THIS clear, and the technical setup confirms weakness, you have to take the shot.

Think about it:

Poor cash flow = eventual bankruptcy risk
Declining sales = no growth story
Sector headwinds = no rotation support
Technical breakdown = momentum selling

That's four different reasons this stock goes lower. You only need ONE to be right.

How To Play This Short

For Options Traders (Recommended):

Buy $27 Puts (30-45 days out)
Risk 1-2% of account
Target: $25 or lower
Exit if stock breaks above $28.50 (thesis invalidated)

For Stock Traders:

Short shares below $27
Stop loss above $28.50
Target $25
Watch for squeeze risk (size accordingly)

For Conservative Traders:

Wait for confirmation breakdown below $26
Enter puts on any bounce to $26.50-27
Tighter stops, smaller size

The Risk Management Component

Even with 95% conviction, ANYTHING can happen in markets:

⚠️ Takeover risk - Someone could acquire KD (low probability but non-zero)

⚠️ Short squeeze - High short interest can cause violent bounces

⚠️ Sector rotation - Sometimes bad stocks rally with their sector

⚠️ Fed week volatility - FOMC Wednesday can create random spikes

Solution: Keep position sizes reasonable (1-2% risk), use options for defined risk, and honor your stops.

What The Tape Is Showing

Volume is increasing on down days. That's distribution—institutions are selling.

Price is making lower highs and lower lows. That's a downtrend—don't fight it.

No catalyst exists for a reversal. That's a red flag—avoid hope trades.

The Bigger Picture: Learning To Short

Most retail traders ONLY trade long. They miss out on 50% of market opportunities.

Why shorts matter:

Bear markets happen (you need tools for all conditions)
Hedging your longs (shorts offset portfolio risk)
Asymmetric opportunities (bad companies can fall FAST)
Cash generation (make money in up AND down markets)

The best traders are ambidextrous—they can trade both directions with equal skill.

Why This Trade Matters

In a market where indexes are near all-time highs, individual stock selection matters MORE than ever.

You can't just "buy anything" anymore. You need to:

Identify strong setups (longs)
Identify weak setups (shorts)
Position size appropriately
Manage risk religiously

$KD is a textbook example of a weak setup. And with 95% conviction behind it, this is the type of trade that can pad your account while others are chasing extended longs.

⚡ Want to learn how to profit in BOTH directions?

AI TradingSkool Paid Members get:

✅ Long AND short trade alerts (capitalize on all market conditions)

✅ Live trade management (Jamar walks through entries/exits in real-time)

✅ Risk management frameworks (position sizing, stop placement, profit-taking)

✅ High-conviction setups (rated 1-10 so you know where to size up)

✅ Bearish flow tracking (see when institutions are shorting)

✅ Weekly market structure calls (understand when to flip bias)

✅ Private Discord with traders who execute both long and short

👉 Stop leaving money on the table. Trade both directions!

The market gives opportunities to the upside AND downside. Are you only playing half the game?

Shorts are where disciplined traders separate from the pack. 🎯