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  • hedgehog25 hedgehog25 Dec 3, 2012 5:21 PM Flag

    Bearish engulfment - pullback starting!

    Okay, so I got screwed last week by jumping the gun, cashing in my Dec 26 calls at a 1.20 average only to watch them go all the way to 3.20 while my newly acquired puts tanked. Frustrating, considering that I *predicted* the run would go to at least the 28's, but tried to be over-clever and play a 1-3 day pullback that never happened. Fortunately a new round of puts from this morning is already up more than 100%, and this time there's technical confirmation of the pullback.

    I predict that the pullback will take it down to around 24, then it will linger around those levels until OE, then turn back up. Why 24? Because that's where a major support line (gap resistance and double reaction high) meets max pain, LOL. You know how it is - can't let all that heavy call interest above 25 expire so highly valued. It's against the rules.

    Alternatively, if it breaks the 24 support line after OE, then it'll probably be a parabolic curve burst and re-test the all-time lows. No solid basis to make that call now, but from the current vantage point I'd say a resumption of the uptrend is more likely based on technicals, and a parabolic curve burst is more likely based on fundamentals.

    Sentiment: Strong Sell

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    • So, that pennant was a head fake. Looks like the pullback is coming after all!

      (Technically it's still in a flag, but you don't see too many horizontal flags, and a false breakout usually means reversal)

    • Support is at around $26.90. Look back at the end of June when it had a huge Gap down from 27 to the 23's. Facebook recently filled and broke through that Gap reaching almost 29 the other day...so that resistance of around 26.90 now becomes support......Looking at how strong Facebook has been I bet the support of 26.9 holds and perhaps trades sideway a bit before going into the 30's where major resistance is at 33

      Sentiment: Strong Buy

      • 1 Reply to boristheanimal1
      • Well, yes, we agree, that's the critical level - and it closed right there. Whether it breaks through 26.90 (approximately) or bounces from there will determine the short term direction. Note that I said 26.80 because support/resistance levels aren't precise to the penny, so just a few cents below isn't really a break, and because it has gone to the 26.80's a couple of times in forming the current pennant.

        The reasons I think it's more likely to head down than up are (1) the bearish engulfment, (2) max pain is at 24, so it should be heading in that direction for OE - though granted there's enough time before OE for it to go up to the 30's and head down again, and (3) I think the market on the whole is heading down - see my posts on the SPY board about VXX as a leading indicator.

    • Just to confirm, OE means option expiration on Dec 21? Also is the Dec 13 lockup of 1.23 M shares in the works, and if so how do you see the price reacting. With this stock nothing makes sense.

    • I'm starting to question this call. It looks like a bullish pennant might be forming. As buylosellhi2012 pointed out, these patterns need confirmation, and the bearish signal has yet to be confirmed. However, the bullish pennant hasn't been confirmed yet either.

      I say the next 30 cent move from here (~27.50) will confirm the direction for the next few days. If it crosses 27.80, the pennant will be confirmed and the uptrend will resume. If it crosses 27.20, the pennant will have broken down, and I'd expect the bearish engulfment to be confirmed (by a close below 27) and the pullback I anticipated to proceed.

    • LOL!!!!

      • 1 Reply to nov98
      • I'm not sure what the "LOL" is about, but my best guess is that for some inexplicable reason you think "pullback starting" is equivalent to saying "it's going to drop like a rock in a straight line from exactly this moment", which is a very silly misinterpretation.

        See the post I just added. Whether the pullback I anticipated will happen remains to be seen. Unless it surges above 27.80 today, I don't see any reason to retreat from my earlier call. As it stands, I still think a pullback from this level is likely.

    • Hedge, U had a point. But I was skepticle about the gulf couple days ago.
      I was also skepticle about the possible head and shoulder formation.

      Charting sometimes is difficult to predict. I learned to follow CONFIRMATION, else it's more on the gambling side.

      It may still go either way, but my take it is gonna go up...

      GL

      Sentiment: Buy

    • Fundamentals wouldn't have allowed this to get over 20. What's your opinion on the odds of this going up or down from here based on comparison of techs to fundamentals, and considering the hedge boys make most of their mula from shorting.

    • Pullback or profit taking? Nothing goes straight up! Nice buying opportunity!

      • 3 Replies to estero655
      • These new Yahoo boards are so messed up. On top of being cumbersome and frustrating to use and generally poorly designed, they seem to be very buggy. My replies to ohze100 and estero655 both showed up under my original post even though I clicked the "Reply" button under the post is was responding to.

        Sentiment: Wondering why Yahoo invested so much time and effort into making changes that were a negative in almost every way, when the boards were just fine the way they were

      • Same $hit, different name. It could also be called a "bullish retracement".

        The tone of your post implies that you misunderstand the term "pullback". It doesn't mean a trend reversal. In fact, they're mutually exclusive. "Pullback" implies a continuation of the trend.

        But no, this is NOT a nice buying opportunity. It's foolish to buy right after a bearish englufment. Wait for it to drop another two bucks, *then* you'll have your "nice buying opportunity". If it stabilizes between 24 and 25, I'll consider going long again, but not before that.

      • Better wait till 21 to add on. Thats my next purchase price,if it does not hit it then oh well,still got my 19 pps.

 
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