Moody's Corp. Falling On Heavy Volume (MCO)

Shares of rating agency Moody's Corporation (NYSE: MCO) are falling today on heavy volume in the wake of the SEC fraud complaint against Goldman Sachs (NYSE: GS) on Friday. The stock has lost 2.55% to $26.70 as traders speculate that litigation relating to the mortgage crisis will continue to weigh on the company. During today's session, 10.88 million shares have traded hands compared to a daily average of 2.62 million.

This stock has been under pressure for some time, and it appears that this trend may continue. In the last 52 weeks, equity markets have recorded a historic rally, but MCO has lost 6.7%. In the last month alone, the stock has lost nearly 10%. Currently, 13% of MCO's shares have been sold short.

If you are bullish on the financial sector and want to hedge your long bets on stocks such as Morgan Stanley (NYSE: MS), Goldman Sachs (NYSE: GS) and J.P. Morgan (NYSE: JPM), a short position in Moody's may make sense. There is speculation that the SEC's fraud case against Goldman (GS) is just the tip of the iceberg. If this is the case, the downside risk from here in Moody's could be considerable.