Enough time has passed that I wanted to mention an idea I gave my Slope Plus subscribers back on November 21st. I wrote, in part, “USO did a perfect gap-fill at 29.08. I shorted some crude oil right here, since this is an extremely clean stop.” My stop was too tight (by a few pennies), but my readers have been warned of that many times, so I re-entered the short afterward. In any case, the gap is noted with the green arrow, and the post was written at the red arrow.
Even I remain stunned how far, and how fast, crude oil is collapsing. The prospect of oil heading to, say, $35 per barrel seems totally plausible to me. At least we have one unmanipulated market that illustrates that, under the fake surface, the world economy isn’t doing so hot.
Urban Outfitters has come roaring back from its hard gap-down that occurred on October 17th. I have thus shorted it, since that gap is almost perfectly filled, and I don’t think the stock tumbled hard for no good reason in the first place.
In its entire history as a public entity, Twitter has had four earnings reports, and for all four of those, there has been a big price gap. Earnings yesterday after the close were no exception, and I was cheerfully short the stock (I thank Slopers for chattering so much about it, since it didn’t even occur to me to short the stock until you guys chimed in). One wonders if the day will come that Twitter’s earnings don’t shock the market in one direction or the other. I’ve covered.
The stock below, KeyCorp, is a good short candidate in its own right, but it’s also representative of the kind of short I’m seeking these days. It has these elements:
+ a clean topping pattern;
+ a firm drop, exhibiting that it’s vulnerable to the general weakness we saw in past weeks;
+ a hearty bounce, pushing it to a more attractive risk/reward level.
As with so many other stocks, this one has a horizontal line anchored on a gap (in this instance, at a dollar value of $12.71) (more…)
Well, pretty-much filled, anyway. I’d say the recovery is over for this one.
Bank of America had a gap of 15.93 which has been closed, to my eyes, satisfactorily. I am now short the stock and long the August $17 puts.