I was just asked about the LEN short and in glancing the previous notes/charts, it doesn’t appear that I made any stop suggestions. If you’ve already stopped out, which you should have if only targeting one of the lower targets, then great. You can always re-enter for a swing short trade if & when we get some solid technical evidence of a reversal. If not, keep in mind that LEN is right about at my usually 3:1 R/R stop threshold in relation to my final and preferred swing target zone (22.30-21.62).
LEN was shorted in two one-half position lots, at 40.01 and 36.42, giving the trade an average cost of 38.22. Therefore, the position is currently down about 5.48 or 14.3%, a very substantial loss but again, still right around the 3:1 R/R based on the profit potential to the final target range. As far as the weekly charts look, LEN is still very close (slightly above) that key weekly resistance level and currently, prices are backtesting the weekly uptrend line that dates back to Aug 2011. Any additional upside above that resistance level starts to quickly damper the bearish case.
As far as the daily charts, LEN is making a run for a second, higher level backtest of the recently broken rising wedge pattern while also making a new multi-year high today… a mixed bag of bearish and bullish chart action IMO. The new high and current momentum are bullish but on the other hand the MACD and RSI continue to lag significantly on this move to new highs, a clearly bearish development. Putting all that aside, I think it would be best to wait until tomorrow to see if LEN continues to build on these gains, especially after kissing the underside of the wedge once more, or if prices turn back down. Therefore, stops at this point should not be much above the 44.40 level (which is about where a backtest would come in tomorrow). Updated daily & weekly charts:
