• BXS - Jul 22 201420140722
  • CSGP - Jul 16 201420140716
  • FRC - Jul 16 201420140716
  • HAIN - Jul 21 201420140721
  • HSY - Jul 21 201420140721
  • KBE - Jul 21 201420140721
  • KRE - Jul 15 201420140715
  • PACW - Jul 17 201420140717
  • PNC - Jul 17 201420140717


Short Setups

Stocks in a bearish pattern formation that are poised to break-down and provide an objective short entry. Also included in this category are stocks that may have already triggered a short entry but still offer an objective entry or add-on to the position at or near current levels such as a bounce back to a key resistance level.

Jul 222014
 
BXS daily July 22nd

BXS daily July 22nd

The BXS (Bancorpsouth Inc.) short trade has broken below the neckline of the Head & Shoulders pattern, thereby triggering the second entry or add-on. BXS was first posted as a Short Trade Setup on Thursday and triggered an entry later that day, with prices breaking below the primary uptrend line. This trade also listed a second entry or add-on criteria of a breakdown below the neckline of the H&S  topping pattern which occurred via a large gap down today.

Prices overshot the neckline by quite a bit immediately following the open today and have since snapped back somewhat & are trading right on the neckline as I type. Therefore, best to wait for the next move below the NL, below the 21.85 area to be safe, before adding to or initiating a new position if not done so already. Also note that the suggested buy-to-cover level for the targets have been added to the bottom right quadrant of this updated chart.

Click here to view the live, annotated chart of BXS

Jul 212014
 
KBE daily July 21st

KBE daily July 21st

Nearly identical to the recent KRE (regional banking sector ETF) short trade idea, the KBE (KBW Bank ETF) has two distinct but not unrelated bearish pattern formations: The blue lines show a breakdown & backtest of the primary uptrend line/bearish rising wedge pattern (complete with a divergent top) while the black annotations show a Head & Shoulders topping pattern with prices currently forming the right shoulder.

The fact that all of the recent short trade ideas are financial stocks (all regional banks plus one REIT) coupled with the warning signs that I’ve been pointing out in the credit markets is most likely not a coincidence. Although I only posted the recent bank & REIT short trade ideas based on their bearish technical patterns, if there are problems brewing in the credit markets, many of the financial related stocks (banks, brokers, REITs, insurance co’s, credit card companies, etc…) will most likely come under selling pressure.

I still plan to add a few more individual regional banks as short trade ideas although I’m still narrowing down my short-list of the most attractive names in the sector. While I’ve been focusing on the regional banking sector, the banking sector as a whole, including the some of the mega-cap TBTF institutions, are starting to look precarious from a technical perspective. As such, I’m going to go ahead and add KBE as an Active Short Trade at current levels with a sole profit target of 27.60 and a suggested stop above 34.00, which is the top of the right shoulder on this potential H&S pattern.

As with the recent KRE (Regional Bank ETF) short, this is only a potential H&S pattern as the right shoulder has yet to be fully formed. Therefore, more conservative or conventional traders might wait to see prices break below the neckline, assuming that the pattern fully develops. Although KBE holds multinational, mega-cap banks in addition to regional banks, the charts of KRE & KBE are nearly identical as there is a large overlap of holdings. Keep this in mind regarding portfolio or position diversification if already short KRE one or more of the regional banking stocks.

On a final note, the popular XLF (Financial Sector ETF) is also on my radar as one of the more promising swing-short candidates. I haven’t pulled the trigger yet but there are several large financial companies, in fact many of the largest components of the XLF, including banks, credit card companies, insurance companies, & even the almighty BRK-B (Berkshire Hathaway cl.B) that although not ready yet, may be setting up as potentially lucrative swing-short trades.

Jul 212014
 

HAIN (Hain Celestial Group Inc) will trigger a short entry on any move below Thursday’s low of 84.79, which will confirm a breakdown below this symmetrical triangle (daily chart).

As the weekly chart below illustrates, a more powerful, longer-term sell signal on HAIN will come on a weekly close below the multi-year primary uptrend line in the stock which makes up part of a very large bearish rising wedge pattern, complete with negative divergences on the PPO & RSI leading up to the January 21st top in the stock.

click here to view the live, annotated daily chart of HAIN                    click here to view the live, annotated weekly chart of HAIN

Jul 212014
 

HSY (Hershey Foods Corp) will be added as a Active Short Trade here around the 93.85 level. HSY recent broke below this 5+ year bull market primary uptrend line with strong bearish divergences in place before the breakdown (weekly chart). HSY bounced on Friday & opened just below the bottom of last Wednesday’s gap today (see daily chart) which offers an objective short entry as that gap will likely act as resistance. For more conservative traders not willing to short until clear evidence of a trend reversal in the broad markets (which I think we will soon get), alternative short entries on HSY might also be made on any bounce back towards the 96 area (resistance) or a break below the 90.25ish area (support)… see daily chart below for both those levels/scenarios.

This trade is based primary off of the weekly time frame & should be considered a longer-term swing trade. Targets are listed on the weekly chart below with suggested stops using an R/R of 3:1 or better based on one’s preferred target and average entry price. Daily & weekly charts below.     Click here to view the live, annotated chart of HSY

Jul 172014
 
PNC daily July 17th

PNC daily July 17th

The PNC (PNC Financial Services Group) short trade setup posted yesterday triggered an entry today on a solid move below the 84.52 level. T1 at 78.20 remains the sole profit target for now but I’ve also added a potential target zone which comes in around the 72-73 area (with the exact suggested buy-to-cover level to be added if/when that target is officially extended).

click here to view the live, annotated chart of PNC

Additional notes: The BXS short setup posted earlier today has also triggered an entry by crossing below the uptrend line. KRE is one of the largest declining sectors today, trading down over 2x the losses of the SPY & QQQ on above average volume, so far a good sign that a right shoulder may be forming but still too early to say with confidence.

The SPY just kissed the bottom of the bearish rising wedge pattern shown here in the last update on Wednesday. The SPY may or may not need one more thrust up back inside the pattern but is starting to approach the point within the pattern where breakdowns typically occur. Therefore, any significant move below today’s lows on the SPY would signal a breakdown of the pattern & likely usher in additional selling.

Jul 172014
 
PACW daily July 17th

PACW daily July 17th

PACW (PacWest Bancorp) is another regional banking stock that looks to offer an objective short entry on a break below the blue primary uptrend line. An add-on to that position or a new short entry will also be triggered on a break below the neckline, should the right shoulder of this potential Head & Shoulders topping pattern become fully formed in the upcoming weeks.

To expand on my recent comments, several short trade ideas for the regional banking center have been posted over the last few days and a few more names in the sector may follow. When swing trading, whether very actively & short-term (days to weeks) or intermediate/longer-term (weeks to months while typically targeting the final target levels), the same rules of portfolio diversification that apply to investing hold true, one of the most important being: Never put all of your eggs in one basket. For example, Continue reading »

Jul 172014
 
BXS daily July 17th

BXS daily July 17th

BXS (Bancorpsouth Inc) will trigger a short entry on a break below the blue uptrend line. A second entry, add-on or new short trade will be triggered on a break below the neckline, assuming a right shoulder on this potential H&S Pattern becomes fully formed. Exact suggested target levels & stops will follow. BXS is another regional banking stock & a component of the KRE (Regional Banking Sector ETF).

Click here to view the live, annotated chart of BXS