Classic Confluence
Twenty/twenty hindsight makes the market look so easy to
figure out sometimes. But still, you have a choice. You can either kick yourself
for missing a great opportunity that stuck out like a sore thumb, or you can
learn from it.Â
SDL
(
SDLI |
Quote |
Chart |
News |
PowerRating) was one shorting (or put buying opportunity) that makes me
want to scream.Â
The setup that unfolded over the past three days and culminated
with today’s implosion is the kind of setup I talk about all the time in this
column. Basically, you have pull back from the combination of a three-month
trendline, its 50% retracement off the previous swing, and SDLI’s 50-day moving
average. That’s confluence. Classic confluence. One of my favorite types of
setups staring me in the face.
Tuesday, SDLI closed down on better-than-average volume. Today
the stock collapsed on huge volume.
Obviously, there was no way to predict the magnitude of the
move, but certainly the pieces of the puzzle fit together nicely for a decent
shorting opportunity that some traders probably picked up on.
Until Thursday,