mcweazy,
EMLX today failed the head and shoulders formation, as it looked like it would:
askresearch.com
The are technical sell signals across the board, though EMLX is not as overbought as I would like it to be. Also, the P/E [116] is not as high as I would like in a short, but it'll do, it's still substantially higher than the going rate. Note also that volume has increased in stepwise fasion on the last three days, which were consecutive down days. That's the kind of volume envelope I like---buying pressure drying up as the stock rallies, selling pressure picking up as it corrects. Almost 8 million shares traded today as EMLX traded convincingly down through the neckline of the H&S, about 2 1/2 times the average daily volume over the last 10 days. I like that in a short.
I'll very likely short EMLX tomorrow. Lower support levels are at 100, then 90, then really nothing until 60. Looking at the implied power of the technical indicators, I'd say it is likely that EMLX will fail at 100 very easily, and soon. A subsequent test at 90 is less assured of a failure, but if it does fail there, a fairly rapid free fall to 60 is likely.
CIEN and RIMM are probably better shorts, partly because they are more overvalued [P/E 828 for RIMM, 413 for CIEN], but I'm already short there, and will cover RIMM soon, and look for a re-entry on any rally. CIEN is to me a medium term short, and I'll very likely hold through earnings and probably beyond, since the prospects of an earnings miss appear increasingly likely:
dailynews.yahoo.com
As always, JMVHO..........................
Walkingshadow |
