As I have time tonight and Sunday, I’ll add to this list of charts. I hope to get a dozen or more setups posted. These setups will be stocks that are rolling over and trading beneath their 50 day moving averages. We want stocks where the selling has already begun some time ago with momentum building to the downside.
The honey hole is indicated on these charts. This is the optimum place to get short. Selling any lower than the honey hole can result in pain as you get squeezed during the obligatory oversold rally. Undoubtably some of these stocks will not rally to the optimum spot. Patience will be rewarded by granting you entries closer to resistance rather than at support.
 We’ll start with [[GOOG]]. If you have big ones, why not take down the mother of the tech rally? A retest of the 50 day will provide an excellent place to get short. A big break of 650 will move the honey hole down to that area of previous support.
Next up is [[DECK]]. While this stock is fresh off 52 weeks highs, I’ve included it due to the company’s exposure to the likely decline in consumer spending. Because it has not been rolling over for some time, beware that there may be some asshole dip buyers left who have just been chomping at the bit to buy any dip.
Let’s look at 2 setups from the red-hot Aerospace/Defense sector.Â
[[ATK]] is offering up itself for the taking with a breakdown beneath its 50 day average and the violation of a year-long trend. Again, the honey hole is where one would short, optimally. It is possible the stock trades back up again into the triangle and well above the HH. Patience is the key here, although this one is not nearly as oversold as many others.
Everyone knows the Chemical sector, housing such leaders as [[MOS]], [[MON]], and [[AGU]] has been on fire. Here are some setups from that sector. Remember, we aren’t looking to take down the strongest from the sector. We want to be in the weakest names when the leaders start to get hit hard.
[[ALB]] has been rolling over for 2 months now. It looks like it may breakdown out of a triangle formation. As it is trading beneath both the 50 and 200 day averages, this stock makes a great candidate.
The next sector we’ll peruse for short setups is Manufacturing.
[[PCP]] has been trying to roll over for several months now. I’d like to see this bounce and once again fail at the 50 day before selling it.
From the Consumer Durables, Appliances sector, we have [[SPW]]. This one has a long way to fall, and I like the breakdown from the triangle pattern. Look for more resistance at the 50 day.
Another one I’ve been watching is [[CLB]]. I believe it would be housed within Energy, but I’m not sure. I just like how it is setting up. It is one of few stocks that is more overbought than oversold. Accordingly, it has been popular, but the failure at the 50 day average after the high volume drop can not be ignored.
From the Heavy Construction sector, we have [[LAYN]]. Again, the same theme applies: 50 day as resistance, and a break through the 200 day average leads to a large fall.
Finally, we have [[GHM]]. This stock is in the metals fabrication industry. Although it has a long way to fall, be careful this one as it may have some fight left in it. However, if it fails right here at the 50 day, well then you know what to do.
Well folks, I’m running out of time tonight. I’ll be posting more setups throughout the week ahead. Hope you can bank some coin from the setups here.
Full disclosure: I have no position in any of the stocks I’ve posted here.
Depending how one draws trendlines: ISRG looks to have broken one & could be good for 50 points down.
and btw, nice call on AAPL seeing 180 before 210. I had dinner with a ‘friend’ on Dec 28th. He was sounding the contrarian alarm bells on AAPL. All he talked about was AAPL, apple products and that he owns the stock.
I sold my position the next day because of that douchebag, but should have shorted it as well.
Hey Woody-
I agree with your analysis of these charts and I think Juice is dead on in regard to ISRG.
Here’s my concern: shouldn’t we discount the significance of moves like these which occurred when EVERYTHING was selling off? How do you isolate the individual stock moves from the broader market declining? My concern is that the most bullish setups occur when the market is flying and approaching a top while the most bearish setups occur when the market is oversold and perhaps nearing a bottom.
Given that the QQQQ is straddling its 200 day it will either be bouncing or something more significant on the downside will be happening. If the QQQQ bounces you can bet that GOOG will bounce with it. If the QQQQ keeps plummeting below the MA 200 then we could probably short almost anything and be successful.
Great job with this site, by the way.
Juice, for some reason, I would not short ISRG, although I agree it is setting up nicely. I may post the chart anyway as other might want to try it.
Jim, I agree with you. There will be a bounce and some stabilization. I do not recommend putting on a bunch of shorts Monday morning. I do think everything is oversold. I am discounting this move somewhat by placing the optimum short area above Friday’s close and near resistance.
Now there is always the possibility that something more significant will happen on the downside, before a bounce or stabilization, and if that is the case, then my patience will not be immediately rewarded.
I think that if we are in a recession, everything will get a haircut, espcecially the previous high flyers. The new stocks that are just starting to break out now or in the near future will be the new leaders, while GOOG, AAPL, RIMM, AMZN, etc, will get trashed. Doesn’t mean that GOOG and AAPL won’t go on to big gains in the future. If just means that those folks that have 3 years worth of fat gains built up in these big, well-known names are going to be killing each other trying to get out before the next guy.
My plan is to expect a bounce and stabilization. I want to see everything going up for several days, maybe a week. I want to see resistance met at the 50 day area on individual issues. Should this happen, that is when I will load up on shorts.
Until then, I may short a stock or two, assuming I can find a few that aren’t oversold, yet still look like they are rolling over.
And I still have several longs in place (in the money) that didn’t get stopped out on Friday. I’m expecting that they will get a lift on a bounce this week. If not, they stop out.
Thanks for the feedback Jim.
P.S. I recently re-tested the 200 day approaching and it tested HORRIBLY over the past 6 months. Have you been testing it still or tweaking it?
I’m getting ready to short GME. The stock should run up a lil this week into their Holiday Sales Release. Should best their best qrt ever. Only prob is spring through summer is a very slow time for games. Grand Theft Auto will do well, but I’d rather play that directly through TTWO. Thus I will go against Danny’s GME Theory 😛
Shed-
GOOG broke that symmetrical triangle I have been spewing about to the downside. What do you think about shorting it from here?
Cubs- GME is a good looking setup. I’d like to get some near 60.
Cheese- tough call on GOOG. The breakdown out of that triangle is important though. You could be aggressive, get short soon, and hope 650 breaks easily. With my money, I’d wait for it to get back up near 675.
Where on earth is your new email addy located?
Same as it ever was, TG. woodshedder_blogspot at yahoo
oic
Then I have been just getting ignored…
waaaaa!
Woodshedder:
Thank you again for the charts. Take a look a SEED. I am selling a little at a time banking very large coin!!!
Lots of Red tickers, nice work. Too bad I didn’t have the balls to go short today. We have to bounce soon, the indexes have fallen off a cliff the past week.
Thanks Cubs. Patience will be rewarded with better entries than you would have gotten today. Some of these bounced directly off the 200 day. We’ll get a little bounce soon, and then I’ll be selling short some of these names above.