HIBB (Hibbett Sports Inc) will trigger a short entry on any intraday break below 49.96. An alternative, more conservative entry would be to wait for a close below 50.00 (shorting just before the 4pm market close if the stock is poised to close below that level). Suggested stop above 53 (or lower, if only targeting T1). Although the actually support level comes in right about 50.00, my preference is to give it a buffer of about 4-5 cents below that level to avoid a premature entry, should we get a brief intraday break below support that proves to be a whipsaw signal.

Typically when a stock falls to a well-defined support level, such as this, there are two ways to view a trading opportunity. Those bullish on the stock, believing that the stock will likely reverse trend and make a lasting bounce off that support level will obvious look to position long on or near the tag off support with a stop-loss order placed somewhat below. Those who believe the support level is likely to give way in the near-future will look to position short on a break below support with a stop somewhat above, in case the breakdown proves to be a bear-trap or whipsaw signal.

Some of the factors for my preference to view HIBB as a potential short candidate vs. a long-side trading opportunity on the next tag of the 50 level is based on my interpretation of the recent price action on both the daily & weekly charts. Note the large divergences between the stock price and the OBV (On Balance Volume) leading up tot he  recent all-time highs in HIBB (daily chart) in addition to the impulsive selling following the late December breakout to new all-time highs (typically a bullish event but bearish when the breakout fails shortly afterwards on impulsive selling). On the weekly chart we can see that HIBB fell below its bull market uptrend line back in mid-August, going on to make a successful backtest of the trendline upon that failed breakout to new highs in late December. The negative divergences in place when the highs were put in during the failed breakout in December helps add to the longer-term bearish case in the stock.

Click here to view the live, annotated daily chart of HIBB