STX for billyjoe
Per “Chat with Spike” tool:
12 Aug 06, 10:24
billyjoe: Spike, I’m looking for a stock in this week’s POTW contest and am torn between shorting STX which has been down the last 2 weeks 8.55% and 9.02% or going long on ERTS which is showing some life.
After spending a good hour analysing these charts from all the angles that I find helpful from a TA point of view, I have come to the conclusion that we’ve missed the ideal time to short this one. The strength into the fuzzy C was the mouse in the air time for a great swing trade. But billyjoe isn’t looking for that; he’s looking for a stock that can win the POTW at mrmarketishuge.com.
STX bias is clearly short side. But at current levels one must really think about whether the r/r offererd is worth it, given the weekly support areas nearby.
It took a good while to work it out, but I’ve discovered that there is in fact a good potential +17% profit short side setup approaching. Statistically, I think a move of 17% has a great chance to take the gold in POTW.
While STX is at/approaching weekly price support levels, it is still impulsive down and the count is favorable from a weekly perspective and a daily perspective. There could easily be some downside left in this ugly daily chart. That gap down on volume is something that we can exploit……for they are a significantly bearish thing, especially when they occur when a weekly chart is acting impulsively down.
I note weekly 100 SMA support it bounced from on Wednesday. I don’t normally mention averages, but Wednesday’s reaction was impulsive intraday, and the fuzzy C of that intraday count shows the fuzzy C at 19.80 (see last chart). That 19.80 support has failed twice intraday since, both times on pretty light volume and price recovered bullishly with a little higher volume on both occasions. So the potential is there for a bullish bounce on the weekly from a fuzzy 5th completion into the abc correctives up….as long as 19.80 holds. I haven’t actually shown the count down from the orange C on the weekly chart (ran out of time) but it’s there. Count if from the C failure, with that 1st move down off it being the 1. So I’d say while price is above 19.80 one should not short this until the abc correctives are made on the weekly chart.
BUT should the 19.80 fuzzy C fail, then one has a very logical reason to short into any strength it offers thereafter, to look for a continuation of the weekly 5th down into a daily 5th down…..to target the weekly channel support or trendline support areas.
So for POTW, that’s a pretty clever little play that can reward nicely in 5 days. One would risk 3% from a 19.80 short (entered into after 19.80 breaks, then a bullish intraday return back UP to 19.80 area). The stop is over the high of the gap down day and therefore limited in a respectable fashion…to target 5th completion perhaps down to the major trendline support on the weekly of 16.40, which calculates at +17% profit. That makes r/r of 5.7, which is pretty good.
I’d say go for this play, billyjoe, certainly over any ERTS long. ERTS faces heavy resistance at these levels and makes for a better short imho. Sorry I don’t have time to chart it up.
STX parabolic stock at:
ParabolicStockPicks.com
Good luck dude! Hope it you take out the gold and this plan does it for ya! 