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8-05-10 Bearish Engulfing Reversal Patterns
Even though the market was up today, there were some outstanding short candidates for tomorrow. Al three of these stocks also have a Bearish Divergence on the MACD, which makes these signals that much stronger.
1. DGIT - Tremendous volume, also found resistance at an all-time high
2. STEC - Sharp increase in volume, perfect looking pattern that found resistance at the Bearish Engulfing from the end of April. This signal is enhanced because it appears at prior resistance.
3. IDT - Big increase in volume over previous day.
I would look for a gap down, or gap up closed as an entry. Remember short-selling can be very risky; when shorting, always use tight stop-losses.
Comment
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Comment by Matt Lauchaire on August 10, 2010 at 10:41pm -
I don't think anyone took any of these trades, but STEC has now formed a nice Bullish Engulfing with volume. I would take this as a signal to stop and reverse; meaning to close out the short sale and buy with a gap up tomorrow.
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Comment by Matt Lauchaire on August 5, 2010 at 3:41pm
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One very Bearish omen I have noticed is the lack of leadership on this attempted uptrend. Most of the stocks that led the way from the March 09 bottom have topped out. Correct me if I'm wrong, but the only leaders that I see left are BIDU, IDSA, PWER, CRM, CRUS, & VMW. I've kept a list of strong trending stocks since April, the list used to have 30 names on it.
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Comment by Stocks To Buy on August 5, 2010 at 3:07pm -
The financials are very weak and breaking their 10 day moving averages....another bearish sign. Could this rally be over?
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