Just a heads up for those in the OSTK short that the trade is rapidly approaching the first target. This trade, like the recent AAPL short and so many other recently completed and still active short trades which are in what I like to call “my own private bear market” are evidence that technical analysis still works (contrary to what I’m hearing from many traders giving up on technicals and finally capitulating and deciding the markets will rise indefinitely as long as Bernanke keeps printing).
The OSTK short currently has a 21% gain from entry and the stock has already fallen over 36% from it’s recent highs, nearly double the standard criteria for a bear market. T2 remains my final target but every trader must decided whether or not to book partial or full profits at T1 or continuing to let the position ride. Either way, consider lowering your stops to protect profits. As “big” as a 36% drop from the highs sounds, keep in mind the original reason for shorting OSTK and giving it some room on the stops. Like the recent Dow Industrials video, the primary time frame and reasoning for this trade was based off the weekly charts and as such, this trade was allow liberal stops to account for any brief fake-out/shake-out move over that weekly downtrend line. Viewing the weekly charts below, note the scope and duration of every other weekly RSI sell signal over the span of this chart (a decade). The fact that prices temporarily broke above the downtrend only adds to the longer-term bearish case for the stock as fake-outs often have powerful, long lasting effects on a stock. For reference, the first string of charts below are the daily charts, in order as posted with today’s updated chart last, followed by a string of the weekly charts.
Daily charts:
Weekly charts:
