Hi freeus,
More on your potential shorts from Vector Vest:
INHL: The stock entered a trading range at the beginning of June. It remained rangebound, until the beginning of January, at which time there was a convincing breakout to the downside---this, at a time when the markets were rallying on the FOMC news.
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A selloff on fairly strong volume ensued, culminating with a V-bottom reversal candle on climactic volume on Jan 11. INHL then proceeded to correct, rallying up to the long term moving averages, where it again failed, confirming the downtrend. So, INHL is in a downtrend now, and for that reason alone would be a potential short candidate. However, now INHL has 8 black candles in a row, each roughly lower than the previous. Today, there was a bullish hammer candle, suggesting to me that this short-term downtrend (within the context of the overall longer term downtrend) will reverse to the upside over the next several days. In other words, INHL looks like it will correct again, before resuming the downtrend. I would not short here, but would instead want to see at least three uptrending candles (preferably white, preferably each higher than the previous), then increasing weakness as the long term moving averages are again approached. It is upon failure again at the long term moving averages that I would look to short INHL. If it did not meet my criteria, I would look for something which did. I like to insist that a short meet my criteria, because of the downside profit constraint inherent in all short positions. If it doesn't, I'll go elsewhere. I am just a lot pickier on shorts than on longs......
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INHL does indeed look to continue its downtrend, but in the next few days it looks more likely to me that there will be a rally. Besides today's bullish hammer candle, there are early technical indications consistent with this, specifically OBV and Williams %R both hooking upwards. Note also the very bullish last candle on the intraday 15 min chart, which suggests there will be good follow through (and/or a gap up) tomorrow, and also that the stock will successfully negotiate the 200 min and begin trading above it, which would consititute a short-term uptrend.
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Bottom line: I'd wait, hoping for failure at the 200, which would be a very high probability short. Definitely worth watching; INHL will someday be a good short, I just don't think today's the day.
MYGN I think is very similar to INHL. MYGN is beginning a longer-term confirmed downtrend, but looks like it will rally over the next couple of days, and probably fail at the 70-75 area, the site of the horizontal long-term moving averages, which should offer very strong resistance. Note that there are early buy signals in OBV, Williams, and PROC:
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I would anticipate a failure there, and again that is where I would enter a short position. The entry signal would come from the intraday chart; if MYGN rallied to the 70-75 area, and was trading above the 200 min ema on the intraday (which it almost certainly would, after rallying from its present price), I would then want to see it test support at the 200 min, fail, trade below the 200 min, rally up towards the 200 min, and fail there. Two bearish candles away from (i.e., below) the 200 min on the failed test of overhead on the intraday would be the short entry signal IMHO. And again, since I'm picky with shorts, if it didn't do so, I likely would pass. I don't like entering equivocal shorts.
TRMS is very similar, with a bullish short-term reversal candle today, but a failure at the long-term moving averages looming next on TRMS's agenda:
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TRMS is very oversold as well, which is another reason why a short here would not be wise. It is preferable to short strongly overbought stocks, not strongly oversold.
VRTS is very similar to TRMS. In addition, VRTS is the only one of your list with decent daily volume. With the others, TA is of dubious value, since their volumes are rather low. But the relationship of price movement to the moving averages and chart support/resistance is still valid even for lower volume stocks, IMHO. It's just that the technical indicators may not be as valid.
So, an interesting list, but at this point I'd make it a watch list. I'd also hope for a general market rally over the next few days, with QQQ rising to about 61 and then weakening there.
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That would push me in the direction of your short list, which would likely have set up very nicely by then, and with a weakening QQQ (or NDX) you could then have the likely overall market trend (i.e., failure at the downsloping moving averages) acting as wind at your back to help your short positions, increasing your probability of a profitable trade.
JMVHO.......
WS |
