VAL (Valspar Corp) and SHW (Sherwin-Williams Co) are about to paint the charts red as both stocks look to be offering very attractive short entries around current levels. Starting with VAL, let's take a look at the daily chart. To begin with, VAL recently put in an Island Cluster Reversal Pattern,
which is a potentially powerful candlestick topping pattern.
The
formation of this pattern began with the giddy Jan 2nd rally gap up and
was completely recently with the large gap down on Feb 12th.
Coincidentally or not, that gap down managed to bring prices just below
VAL’s primary uptrendline which began with the Aug 2011 lows. Prices
have since struggled to regain that trendline as VAL has backtested it
from below for the last week or so. Therefore, I’m adding VAL as a
active short here at 62.07 with an initial target of 55.55. A logical
stop would be on a move above the 64 level, which is just above the
lowest point of the island cluster of prices.
