The Importance Of Getting A Second Opinion
A friend of mine told me
last night that he was thinking about shorting Constellation Energy (CEG).
As you can see on its daily chart below, CEG is trading the inside of a third
bear flag after breaking down below its 50-day moving average. The stock has a TradingMarkets.com
three-month RS ranking of 20 and an ADX reading of 32 (as of the close of
7/2/01) that verify the weakness of the issue.
There are at least two ways to short
Constellation Energy. The first entry is when the stock trades below the low of
July 2. The second is when the issue breaks below the bottom of the bear flag.
The chart above looks bearish enough for many traders to consider shorting the
stock based on that alone, but it wouldn’t hurt to get a second opinion to
confirm our view.
Let’s check the Utility Sector Index because CEG is a utility stock.
Interestingly, or expectedly, after breaking down below its 50-day moving
average, the index is also trading the inside of a third bear flag. This
gives us a little more assurance that we should consider shorting the stock.
Get a second opinion. It will give
you the confirmation you need.
Have a terrific Fourth of July!