After looking through my daily charts I found a perfect example of shorting a stock on lower lows. For the example I am using Holly Corporation (HOC) as it’s chart just today broke to lower lows after setting up a tiny base (the chart can also be found on sister blog Stock Charts to go).

(Extra Help: The concept for this is very simple as it using basic technical analysis on stock charts. If you need help understanding and reading stock charts than read the post here first, and if you want to refresh your skills take this quiz.)

Example Chart:

All you need to take note of for this play is the last sevenish days of trading activity. You can how Holly Corporation (HOC) stock traded down to new lows at about $65 three days ago. The stock then rebounded up for two days than today fell once again. The short point for this simple play is when the stock crossed $65 (2nd black line) and hit new lower lows. A cover stop around $68 would be more than sufficient to protect yourself from losses. Initial target price would be the 200 day moving average (red line) at about $60.

The first black line is an earlier shorting position which integrates yesterday’s post of three shorting strategies using technical analysis.

If you enjoyed this post, make sure to Subscribe to the feed (you can also subscribe with free email updates). Then, check out the Investors Forum (New members register here!)

Related Posts:

• Market Sheds 5% in Six Days, January Lows Tested
• Seeking Direction
• Post Market View
• 3 Shorting Strategies Using Technical Analysis
• Needing to bounce

Recent Posts:

• Timeline of 17 Recessions and World Crises Since Great Depression
• 40 Great Inverse / Short ETFs For Bearish Investors
• OptionsXpress Online Stock Broker Speed Review
• Weekly Market Commentary - July 15, 2008
• NASDAQ 100 Market Index Stocks

Filed Under Technical Analysis |
Subscribe to the Blog | Recieve Blog Updates by Email!

----------------------------------------

Share Your Knowledge »