March 16, 2009
Short Stocks Opportunity
By Planet Wealth
There are alot of stocks forming the same sort of patterns at the moment, and with the overall market down, shorting stocks can be a high probability choice.
CPU is forming a familiar pattern right now. It meets the basic criteria that indicates the sellers are in control and are likely to be around for a bit longer. Let’s take a look starting with the weekly chart. The first indication sellers have taken control are the Lower Peaks (LP) and Lower Troughs (LT). The stock consistently fails to make a higher price each time it rallies, instead it makes new lows each time it falls. The blue highlighted area is a cross section of 3 strong weekly resistance lines which the stock is likely to respect and be pushed lower again.
Now to stack the odds in our favour, and look for more to give a higher probability of the stock falling. There is a Head and Shoulders (H&S) patter that has formed and been validated. (see previous posts for details on this pattern). The target area is about $4.00, which is also a key support level. The last point I would consider is Fibonacci levels. CPU is at a significant Fibonacci number now, which has a high success rate of acting as a strong resistance.
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Topics: bear market, put options | No Comments »
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