I scan for stocks that are breaking down on volume daily looking for stocks that are in stage five; cascading lower on volume after a huge run up (preferably former IBD 200 Member and widely posted on blogs and talked about). This type of pattern is often triggered by or precedes an earnings miss or downward guidance after several quarters of positive earnings surprises. It is at stage 6 that I then attempt to get short, when the markets are over bought but showing signs of weakness ( e.g. T 2108 above 80 for weeks/months and now flashing divergence or few leaders breaking down on volume etc.) but most importantly when the stock has been rejected at the 10 week/50 day SMA and has turned lower.
This is the logic behind my short trade ideas like former IBD 200 members: CREE, KIRK, VPRT, SNDK, SANM, ISRG and RUE.