Scott, the reasons I suggested for those interested in shorting here, that shorting KLIC above $17 with a stop loss at $18.75 are numerous. If one is inclined to short, one should limit the potential loss, in this case well under 10%. $18.75 would be a new high, and the supply around here from the last four visits to the $17/$18 area (May, twice n June and end of July, beginning of August) should provide very strong overhead resistance. Furthermore, KLIC has penetrated the top of the Bollinger bands, if you look at the following chart:
stockcharts.com[h,a]dacayimy[dc][pb50!b200!d20,2!f][vc60][iut!Ub14!Lg!Lf]
You would see that often such penetrations involve at least a return to the median (or about $12.5) and sometimes (when market conditions in general are bearish) return to the lower part of the B bands (around $10).
While I do not short myself , when asked, I try to identify overextended situations in which the risk can be limited. KLIC , is one such potential situation.
Zeev |
