The Dow exploded three whole points higher today. In spite of the day being pretty much a non-event, my overall portfolio enjoyed over a 1% gain, even in the face of continued strength from gold. My utilities-oriented and commodities-oriented shorts continued to do well.
The big news this evening is Hewlett Packard, since their results and projections are garnering a chilly reception after-hours. I just so happen to own puts on HPQ so I thought I'd take a moment to explain why I liked this chart on the short side so much in the first place.
There are a couple of potent events in this chart. The first one, circled in red, is the break of a major trendline spanning back to October 2002. Let's put it this way: that's a really major trendline to fail. The second one, circled in green, is the retracement of the price back to its failure level. The third, which is looming in front of you, is the topping pattern spanning 2007 and almost all of 2008. To put it another way, this is a gorgeous chart for the bears.
As of this writing, the stock is down 6.4% (which for a stodgy, boring company like HPQ is huge). I can see this stock hitting $19 before any real stabilization takes place. That sort of price event might be months off, but I think it will be many, many years before HPQ sees its price back where it was last year.
