The good news, and this is nothing short of a miracle, is that none of the stocks I have selected have decisively broken their 50 day moving averages so far. With example #2, I thought there were times that it certainly would, and that it was game over. The following image shows what I mean.
The main thing to notice about the above image is how the 50 dma was broken intraday, but the stock never closed beneath it. This means that the 50 dma, our last line of defense against the bears, held. Also notice the long lower shadows in the recent candles, which indicate that the bulls are still in contol. This sort of price action makes me more optimistic about this particular security, and I may have to consider doubling my position in it.
Anyway, for this week, I had a very difficult time finding a new stock to post. The market's precipitous decline caused so much distortion that my scan could not pick out another good opportunity.
So what I did was flip the scan's criteria, so that it would find stocks in massive, unstoppable downtrends. I also made it look for only American stocks, since the US Dollar is in a bear market, and since I am Canadian, this could potentially enhance my returns.
Here is a chart of the stock the scan isolated:
The rules are the same as before, just flipped around. You would go short this stock, and place a buy stop above the 50 day moving average. The 50 dma will act as resistance this time around. Your risk would be limited to the amount of distance between the price you short sell it at and the current level of the 50 dma.
For this stock, I would perhaps wait for a little counter trend rally to short sell it on. So, that is all for this week's post. I hope that made sense.
No comments:
Post a Comment