For the first time this week, we actually have short positions. However, I am not so sure that this is the end of the bullish trend and a possible start of a downtrend. Instead, it appears that these are past leaders that are simply being sold off so a rotation of money into new leaders can occur. There are a TON of stocks build cup shaped and double bottom shaped bases out there and very few charts that look ripe like these three. Therefore, I do not think this is a start of a new leg down but just three weak stocks in a decent uptrending market. There is a problem with the indexes, however, that we need to be aware of. That is the amount of distribution days that are starting to pile up. Even though they are extremely weak because volume has been below average for the past 28 days, the NYSE and DJIA have suffered three distribution days and the SP 500 has suffered four during the past few weeks. This is something to keep an eye on because if it starts to turn into heavy volume selling I am going to have to abandon the longs that start to move lower with the market. Hopefully, though, for now, this is just normal distribution within an uptrend and God willing we will get volume to come in once the mutual funds start to put all that cash to work. You guys that are forum members need to check out that mutual fund section that I have. If you don’t normally go there, you need to check out all the TOP GROWTH MUTUAL FUNDS with A, A-, and B+ ratings. There are so many with 10% to 30% cash that it is ridiculous. I know I have not seen cash this high since late 2002. These guys will one day have to get back to work as cash piles up and I pray that it is soon because every month my bills increase and increase and I sure would like to start watching my portfolio’s balances start to grow exponentially higher. However, I understand I am powerless to the stock market as it is a SUPER STRONG entity and will do whatever in the heck it wants to do. So it is what it is and right now it is good. So keep these shorts small, newbies do not even attempt to go short, and sleep well and work well today knowing that these are all very small and even if they reverse 20% each I will not feel it. I am going for lunch money to HOPEFULLY!!!! rent money. Keep these small and cut your losses if they don’t work right away.
new short positions: CEG PLL GEO
CEG is breaking down below the 50 day moving average, after failing to hold above the 50 and 200 day moving average last week, on extremely strong volume. This stock topped in January and has since rolled over on higher volume with clear distribution in January, February, March, and April. The stock has failed to get back above the 50 DMA three times and now it is breaking hard. If there is ever a stock to short this one would be it as it had a very bearish reversal today with BOP going red and moneystream leading the way lower. The RS line is also showing negative divergence as it is hitting a new three month low while price has yet to hit a new 3-month low. Cut your final loss with a close above the 50 day moving average, if the stock does not move lower immediately.
PLL is breaking down from the 50 day moving average, on strong volume. The stock topped back in July on huge volume and red BOP as it began one nasty selloff. After that selloff the stock has had many fits and starts with it constantly failing to hold the 200 day moving average. It failed in October, December, February, and in March it almost made it to the line but not quite. After failing to even get back above the 50 DMA this time, it is now rolling over on higher volume and there is now very negative bearish divergence in the stock as the RS line is hitting new monthly lows while the stock is still above previous lows and the moneystream line is already touching previous 52-week lows leading the stock lower by a good margin. Cut your final loss with a close above the 50 or 200 day moving average (depending on your risk tolerance), if the stock does not move lower immediately.
GEO is breaking down below both the 50 and 200 day moving average, on strong volume. This stock has spent a long time topping out as it topped in October selling off on very strong distribution and red BOP which led to a choppy downtrend lower into January where the stock spent a time rallying on lower volume over the 50 and 200 DMA in March and April. However, the stock took the averages on below average volume and since has not been able to hold as it is now breaking down below both key lines on very strong volume. This was the fifth time since the start of the selloff that an attempt to recover the moving averages has taken place and now it is failing on strong volume. This move should start another leg down, but if the stock does not move lower immediately, cut your final loss with a close above the 200 day moving average.
