Posted On: 01/19/2014 11:14:46 AM
Post# of 2561
BBY Daily Chart ~ A Lot of Clues Before the Collapse
I have been following BBY for a long time. I never played the stock during the huge gains of 2013. I also didn't short or buy any puts on the stock as it began to break down in November. I know one investor who did buy some puts in December, and this last week he killed it with the collapse of BBY. Congratulations!
I'm posting this chart so others might learn what to look for in the charts as there were a ton of clues that investors could have seen as caution signs to take a few or all off the table. The charts that I've posted for months typically focus on the upside and the various formations such as the rising support lines, horizontal resistance levels, etc. With BBY, one can see the opposite formations. We can see a gap to the downside in mid October. That gap was filled but there was a failure to close above the upper gap line. More importantly, look at the negative crossovers of the FullSto and MACDs which began in October and continued into last week before the final blow on Thursday with continued bleeding on Friday. What I always look for as a stock is moving up is the ability to move above horizontal resistance lines. With a falling stock, the failure to hold horizontal support lines is a strong indication that the stock will drop further. Add to that the declining tops line (opposite of a rising support line).
The important thing to learn here is that one can never predict how far a stock might fall when the indicators begin to turn negative. Sometimes is just a small pullback or consolidation. And sometimes it's a disaster as was seen with BBY this last week. But had an investors paid attention to the warning signs since late October, they could have taken some or all off the table and avoided a devastating hit to their portfolio. GLTA
I have been following BBY for a long time. I never played the stock during the huge gains of 2013. I also didn't short or buy any puts on the stock as it began to break down in November. I know one investor who did buy some puts in December, and this last week he killed it with the collapse of BBY. Congratulations!
I'm posting this chart so others might learn what to look for in the charts as there were a ton of clues that investors could have seen as caution signs to take a few or all off the table. The charts that I've posted for months typically focus on the upside and the various formations such as the rising support lines, horizontal resistance levels, etc. With BBY, one can see the opposite formations. We can see a gap to the downside in mid October. That gap was filled but there was a failure to close above the upper gap line. More importantly, look at the negative crossovers of the FullSto and MACDs which began in October and continued into last week before the final blow on Thursday with continued bleeding on Friday. What I always look for as a stock is moving up is the ability to move above horizontal resistance lines. With a falling stock, the failure to hold horizontal support lines is a strong indication that the stock will drop further. Add to that the declining tops line (opposite of a rising support line).
The important thing to learn here is that one can never predict how far a stock might fall when the indicators begin to turn negative. Sometimes is just a small pullback or consolidation. And sometimes it's a disaster as was seen with BBY this last week. But had an investors paid attention to the warning signs since late October, they could have taken some or all off the table and avoided a devastating hit to their portfolio. GLTA
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