NTRI was first added as a short setup back in March of 2012 with a short entry to be triggered on a weekly close below the weekly horizontal support line around 10.00. That sell signal finally came in late October and the stock proceeded to drop nearly 30% from there. Since then, the stock has recouped a good bit of those losses and I most recently covered NTRI in the Dec 21st $RUT Overview video.
At the time, NTRI was setting up in what looked like a nice bear flag pattern on the daily time frame but the stock has since continued to move above the pattern. One of the possible causes, or likely contributions to the recent rise in the stock was the announcement from Interactive Brokers (and possible some other brokers) of increased margin maintenance on low capitalization stocks, including NTRI that will raise the margin requirement incrementally over 10 days starting on Jan 11th (to 50%, then 75%, and finally 100% on Jan 21st). Such aggressive margin changes on a stock, especially one in such a strong downtrend (high short interest) most likely caused a lot of short covering.
Regardless, my technical read on the stock is this: NTRI remains below that critical key former support, now resistance level discussed previously on the weekly chart. That key resistance level is shown on this daily chart as a zone running from about 10.08 – 10.26. There is a gap resistance zone on that chart which comes in around 9.20 – 9.40. Also note the price action in NTRI following every overbought (70+ RSI) reading on the daily RSI.
As I had started a very small initial starter short position at the top of the recent bear flag, I now plan to add a second lot on or around current levels, ideally as close to the bottom of that gap as possible, should prices approach it tomorrow. I will also allow for at least one additional lot to be added on either a full backtest of the key resistance zone (if it gets to the 10.00 area) or if prices turn lower and the broad market confirms some type of reversal as well. Price target(s) TBD & stops will be on a solid weekly close above that key resistance zone. As I believe NTRI has the potential to be a very lucrative long-term swing short, large price target = large stops. NTRI will likely be added as an official short trade tomorrow assuming that prices trade roughly around today’s closing level.
