This evening, I was trying to think of a good topic for a post, since I don't have any general market commentary beyond what I stated in last night's video. I therefore fired up my portfolio and picked the best-performing shorts (that is, worst performing stocks) in my positions for Thursday so I could share a few thoughts on them.
We start with Abercrombie & Fitch, which I've traded many times. This one is most vulnerable to being stopped out, but it also has excellent potential. My stop-loss level is represent by that horizontal line, but what I'm hoping for is a failure of that supporting trendline. That would be a pretty dramatic reversal of fortune, so I don't put very high odds on it, but if it happens, this stock is in extremely serious trouble.
Next up is Sotheby's, which is sporting both a head and shoulders pattern and a descending, broadening wedge. My stop is just under $35, and this stock could get into the low 20s if we encounter general market weakness.
Below is Celenese, which gained about 40% in just over a week from its severely oversold levels. That just goes to show how volatile this stock can be. Once again, my stop is at that horizontal line, and a resumption of serious market weakness would allow this stock down to around $25.
Newfield Exploration has already lost about half its peak value, but considering the tremendous overhead supply in this price chart, I'd say it's pretty likely this will stay below $45. What I love about this chart is how little there is supporting prices beneath current levels.
Finally is Polypore, which is a pretty handsome H&S pattern with an extremely wide range of about $20. My stop-loss price is set to just above Wednesday's high, and a sustained break of that neckline above $50 would, I believe, spell big trouble.
That's going to be it for me today. The past two weeks have been, on the whole, quite positive for the bulls, and the weakness early on Thursday was shaken off in short order. Let's see if Friday can present the bears with anything that actually sticks.
