While it would be fun to ride RIMM down 50 points, or take GOOG down 100, unfortunately the leaders usuallyÂ do not give up easily. No, when shorting a stock, look for one with all the gumption already beaten out of it.
A good example of that kind of stock is EMN. After the July peak, the stock sold off, but found support at the 200 day moving average and the 61.8% retracement level. For the next 3 months, EMN bounced around the 50 day average. In November, the price was barely able to overtake the average, and EMN gave up on heavy volume.
The circled area on the chart shows that the 200 day average has now become resistance. At this point, shorting this stock should be like pushing old men down stairs. It will only take a little shove to get this one really falling.
AÂ stop above 66 and a target of 57 will give the trader aÂ reward/risk ofÂ 3:1.Â
I like it…
I always look at RSI(2) as a great buy/sell indicator and this one is safely around the middle, 43+ change and falling. Short away!
Only hitch could be the 700 million share buyback. They just finished a buyback of 300 million. At 700 million, that would roughly be 10 million shares. Not a whole lot, but enough to slow the descent, should mgmt. choose to. However, maybe at least one member follows TA and will figure he’ll just wait for support at 57 before buying any back…;)
Do you like that Fusion service or no?
Yeah, it’s nice. Why?
I’m sure I would like it but it wouldn’t work on my “old school” non-intel chipped g5.
nice pick shed
I’m liking this new blog, a lot. Nice job everyone!
Shed, how bout an ERTS short?
I’ll be puttin one on today … no bouts adoubt it
ERTS looks like it might still have some fight left. Also, as a parent, I’ll tell you that I’ll buy just about whatever my kids want, no matter how broke I am.
However, if there is another downdraft, it will follow the crowd…
Juice – Original break-out level at 54 will still act as support for ERTS. To back what Wood said, if you look at the stock relative to its industry group, it is stronger than most stocks in the group. Never wise to short a leader. The short term trend is the only thing that is negative right now, so you are swimming upstream with this short.
Wood â€“ you should keep ERTS in your back pocket as a developing cup-and-handle pattern when the market stabilizes. No rush right now.