Two New Short Positions For Monday

September 21, 2007

new short positions: HLEX ALEX

HLEX is breaking down right at the “death cross” of the 50 and 200 day moving average, on very strong volume. After putting in a top in April, the stock slowly sold off on lower volume to the August lows. The August lows appeared to be on a ton of support. But as the stock climbed back up the chart, it failed to hold above the 50 day moving average and soon was back below the 200 day moving average. The stock has tried to retake the 200 and 50 day moving average but was recently stopped at both lines. Today, the stock is now breaking down from those lines on very strong volume. What makes the breakdown really bad, today, is that the 50 day moving average has just now crossed the 200 day moving average which is starting to flatten out and rollover, right where the stock is breaking down on strong volume. The RS line is leading the stock to new lows as the RS line has pierced its August lows ahead of price. Cut your loss with a close above the 50 and 200 day moving average, if the stock does not move lower immediately.

ALEX is failing at the 50 day moving average and breaking down below the 200 day moving average, on very strong volume. This is a little different of a chart topping pattern than what we are used to seeing. This stock has topped very quickly, with the stock failing a poorly constructed breakout in August, the stock quickly reversed on much heavier volume crashing right through the 50 and 200 day moving average. After a very low volume rally back above the 200 day moving average, the stock could not get back above the 50 day moving average failing at that key line twice (beg. of Sept. and two days ago). The last failure came on a pickup in volume over the 50 day volume average and today’s breakdown below the 200 day moving average is coming on even much stronger volume, confirming that distribution is underway and that the sellers are in control. The clear obvious show of weakness in this chart lies in the RS line. Just look at the August price lows compared with the August RS lows. The RS line has been freefalling, while price has moved sideways. The recent breakdown in the stock still has price well above the August lows, while the RS line is WELL INTO new lows confirming the extreme weakness in this stock. I don’t recommend staying long in this stock, unless it starts working lower immediately, as it does yield a 2.3% dividend. Cut your first loss with a close over the 200 day moving average and your final loss with a close over the 50 day moving average, if the stock does not move lower immediately.

Last 5 posts in Free Archives Shorts

Posted by Joshua Hayes | Filed Under Free Archives Shorts 

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