Are You Long Aetna? Look At This…

• October 4, 2004
• Derrick Hobbs

Beware
Aetna.

Aetna (AET) has been on a roll lately. The stock has popped up on my
radar as a stock that swing traders should either:

a)     
consider taking profits on the long
side

b)     
tightening up stops on long positions
(to lock in some nice gains)

c)     
To be setting up a short swing trade

I say this because Aetna has
just completed a Bearish Butterfly pattern. Just a refresher on this pattern:

a)     
X point has to be higher than point B,
preferably B is between the .50 and .786 retracement of swing XA.

b)     
Swing point C must be above point A
and again preferably between the .50 and .786 retracement of swing AB. The only
hard and fast rule is that C not go below A.

c)     
Finally point D needs to be between
the 1.272 and 1.618 extension of swing XA.

 Aetna fits all of these rules.
In fact, it has another unique “symmetry” characteristic that I like. Swing A to
B was 46 trading days, and swing C to D is now at/around 46 trading days. The
symmetry in trading days of AB to CD is a nice confirmation tool for this
pattern and gives me higher confidence in the trade/setup.

 

Have a great trading day!

Derrik