The Downside Ducks All Lined Up
Scanning through my charts today, it wasn’t
difficult to find some good examples of stocks that have the potential for more
downside follow-through.
Advanced Fibre
(
AFCI |
Quote |
Chart |
News |
PowerRating) is one good example of this. As usual, I look for
these ingredients to be in place in any viable trading setup:
- The trade is in the direction of the dominant trend.
- Volume surges on the price volume.
- Multiple patterns all agreeing with one another.
AFCI fit the bill, in that it bounced down from the top of a trend channel on
200% average volume Tuesday. Wednesday, we’re seeing AFCI continuing to
drive downward off yesterday’s momentum. At the time of this writing, AFCI is
breaking cleanly through its 200-day moving average and is looking to close near
its lows of the day. All of this is happening within the context of a downtrend
which has been in place since early March.
The stage appears to be set for some further weakness which will perhaps take
AFCI to its early-August lows.
See you tomorrow,
Eddie