The rising wedge
in red broke down on Friday, February 29, 2008. Rising
Wedges are most commonly found in bear market rallies
and the breakdown of a rising wedge usually declines
quickly and takes back at least the distance made
up in the wedge, if not more.
If
you own this stock – GET OUT!
It looks like
you may be able to get a nice short off at between
$50 to $51 on Monday. The wedge started forming at
around the $42 level and that makes for 8 points of
profit. There is double horizontal gap support at
just over $46 a share, which may slow the decline
and may be a good place to take some off the table
and then cover stop yourself out back at $50 in order
to lock a profit in. The target full trade short covering
price is $42.
If you want to
play it very conservatively, place a sell short order
at $52 and a cover stop at $54. Your max loss will
be $2 or so but chances are you will not get into
this short trade as it looks like it goes nowhere
but down from here.
To learn more about Rising and Falling
Wedges see Stock Trading Card T18 and watch Lecture
4. Visit www.StockTradingCards.com
~Robert Perrego
Disclosure –
no positions in CMI
2/29/2008 4:33:28
PM
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