Tuesday, April 13, 2010

Shakeout Coming

Notice on the hourly chart how momentum as measured by the MACD has never comfirmed the breakout to new highs, and neither has volume. This cannot continue indefinitely. The most likely scenario at this point is a sharp but quick pullback to the January high of 46.64. At that point we can evaluate whether further declines may follow, but it is important to implement some kind of plan to protect profits soon. I suspect we will see one more down up sequence before a selloff, but I wouldn't count on it.

I am currently looking to take profits on short term long positions tomorrow and Thursday. I sold EXPE today for a quick (by quick I mean 11 days) profit after it's 3/29 breakout. I am holding intermediate and long term long positions through any correction, and have been building a few short term short positions over the last week. Profit expectations are in the range of 2 to 3 x 10 day ATRs on short term positions.

One interesting short setup is JBL, which has broken its February to March trendline and looks to retest its February low around the 200dema. A break of the March low to the 200dema is around 5 ATRs.

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