Here’s One Short That I’m Zoned In On
Truth be told, a lot of
pattern resistance has been broken in quite a few issues lately.
The better play has been to
actually reverse the original ‘fade trade’, and to have gone long
when the initial pattern and zone were busted. But, before you join ‘the bull’
party, don’t forget the saying, ‘all good things must eventually come to an
end’–especially when a further price extension makes even more potential
‘cents.’
eBay is a good example of a first pattern
and zone being broken, and where a reversal trade would have worked out quite
nicely. Last week, at lower levels–the issue put in a potential Fibonacci
pattern high, called the Gartley. That potential pattern high was broken before
it even triggered on the daily chart as the stock blasted higher right through
the potential formation and thru resistance. Now, in today’s trade we have a
situation where yesterday’s highs just pierced an even higher key resistance and
pattern zone, as defined by a Bear Butterfly.
10:25:19
Reversal Setup
eBay (EBAY)
is another internet (HHH)
issue that is showing a Fibonacci pattern against a key resistance zone–off .46
at 89.26. Yesterday’s highs pierced a Bear Butterfly zone, as well as some
two-step price projections that come in between 88.20 – 89.63. Today’s intraday
action has the stock forming a low level
Slim Jim on the 5-minute chart, from which traders might consider position
shorts.
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I can’t speak for others, but with a pattern high
in place and a market cap of nearly 58 billion already–you won’t find this
cautious bull putting any bids in on the eBay anytime soon.
Chris Tyler