Saturday, August 17, 2013

After the megaphone pattern

I exited DUST (short position) on Friday. The move down have been fast. But not only that, it's been exponential and that is something I always look for in my trading decisions wheater it be buying or selling.

Edit: Another reason I forgot to mention was tht it had a large volume spike yesterday. Usually a spike in volume comes a day or two before a reversal, sometimes at the same day.

When a chart breaks down from a megaphone pattern like this, with increasing tops, concave support floor and a break of resistance their is still money to be made on the short side in the coming months. I'm expecting DUST to loose half its value from here within a few months. Until then I'm hoping for a bounce and to reenter on the bounce. I highly doubt that this chart could crawl back up to previous tops. It might make an attempt at the 80 level since that is where the last concave support line is, but it is doubtful if it will get that far. Available stocks for short selling is another question. If the bounce is sharp enough I could as an alternative to shorting DUST go long a regular gold miner ETF (GDX) or even the leveraged bull ETF (NUGT). 

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