The short story on CBOE Holdings (CBOE) — this is the pattern we’ve been looking at. (December 16, 2015)
For the last few sessions I’ve been talking about this short setup on CEBO ( NASDAQ:CBOE ). This is what we got today; just look at the past videos because I’m going to make this a short one. This is the channel, so many times you see returns either to the channel and then lower or even back into the channel. But very rarely will you see a move to reassert or confirm the uptrending resistance lines. Typically, after you get a big break like this, there’s going to be some kind of breakdown. Think about it this way, you’ll see this all the time on the bullish side, we’ve got a stock downtrending and then it does what it does and then it breaks out here. How many times do you see it then do that? Not that often.
Instead you’ll see it pullback somewhere here and then start moving higher and then it does what it does. Some examples are some of the oil companies like Chevron ( NYSE:CVX ), Halliburton ( NYSE:HAL ), that type of thing, recently, not today. You can look at those and see what I’m talking about. My idea here on CEBO ( NASDAQ:CBOE ) was, wait for the stock to reverse. Get a nice red bar like this and then that’s when you’re shorting. The idea is you are putting a stop, a buy stop, above the high. So this is exactly the trade that you want to be making. Ideally you’re shorting in the morning, you’re shorting this morning when there was no follow through. If you did that, that’s great. All I’m doing is pointing out this pattern.
The idea is that the stock returns to a breakdown level and is unable to get past it. Now the stock’s moving lower, you’re short the stock, at least look for a 5 percent move. It’s likely to find some kind of support at the 200-day moving average. The whole point was not to some big whopping 200 percent return on CEBO ( NASDAQ:CBOE ). It was just to illustrate this point of how you short a stock. You don’t want to be shorting stocks when they’re going down like this, “Oh, is it too late to short CEBO?” You look at stocks like this all the time, where people see this and they’re waiting, and they’re waiting, finally they decide, “Oh I shouldn’t be buying, I should be shorting,” and then that’s when you see this type thing.
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