Which chart is the right chart for Herbalife (HLF)? (January 06, 2015)
I want to go over Herbalife ( NYSE:HLF ). I mentioned this in last nights Chart of the Day, here’s a new day, same chart only with about almost 8 percent less in market cap. So what are we going to do? I’ll say it again and this is really easy, this is a big massive double top, here you have potential support but this is quite a ways above where it is now.
You want to still be selling this stock, I’m not really sure that I would be aggressively shorting the stock; you don’t really want to be doing that. Short interest is actually kind of high, there’s a pretty high short interest; you’d probably make money if you can short this stock. By the way, if you can’t borrow shares you should take that as a sign. But everybody and his brother are already short, so that’s a potential short squeeze.
Not to say it’s going to happen but you can always buy puts on it, and the options are very liquid here. But think about this, first of all Ackman is ultimately being proven right. I don’t know about the company, Ponzi scheme, and all that, whatever. But the chart is sure looking very Ackman friendly here, so that’s a good thing for him and for those who are invested in Pershing Square.
But what about Soros? Some guy who was the genius and got Soros into this big position in Herbalife ( NYSE:HLF ), well he’s gone, and I guess so is somebody else, they left. How they left they probably had a bit foot up on the backside by George even though they’re saying, “Oh it was totally unrelated,” Sure. The bottom line is Soros is out.
Don’t you think a lot of fund managers, they look at Carl Ichan, they look at George Soros, they see those two guys like, “Hey they’re in Herbalife ( NYSE:HLF ), Ackman’s short, Ackman thinks this is going to zero. Well I don’t like Bill Ackman,” because for whatever reason they don’t like Bill Ackman, so they’re long this stock.
So now Soros is out, the guy that got them in is fired. Icahn is certainly losing his whatever. So how are you as a fund manager or as a large money manager, how are you going to defend owning this stock to your clients? How are you going to defend them saying like, “I notice I own Herbalife ( NYSE:HLF ), why do I do that?” What are you going to say?
Of course if you’re in a hedge fund you don’t have to tell your clients what you own but you’re going to have to tell your fellow managers. The bottom line is this, there’s really no compelling reason to own Herbalife ( NYSE:HLF ) if you’re a big money manager; that’s why the stock has been under distribution. The underlying reasons for no compelling reason is beyond the scope of this video.
The bottom line is this, this stock is going lower, period. I have no axe to grind with Herbalife ( NYSE:HLF ) I don’t care. I don’t care if this stock is 20.00 or 120.00, but right now the low here was 29.43. Do you really think that’s like the low? That’s going to be support, got to start buying Herbalife ( NYSE:HLF )? No.
If the stock starts bouncing at all, if it starts to come up tomorrow, I would use that as an opportunity to short. If the stock does not start to come up tomorrow but if it continues lower, I would use that as an opportunity to short. But just know that this is your chart, this is the operative chart, not the daily chart, certainly the intraday chart, you look at this stuff, it looks to me like it’s poised for a rally, doesn’t it? It does to me.
Big massive down for, and these are 15-minute bars, then a rally; this looks like a tradable bottom to me. What are the numbers, from 29.50 up to 30.50 now; big whoop, 3 percent, don’t use this. You can use this as your entry if the stock does start to rally. But instead use this as your reference for whether you want to be long or short the stock. Whether you short, fine, whatever, I would just say don’t be involved in this stock on the long side; it’s not going to work well for you.
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