DECK – Deckers Outdoor – Bearish Flag

DECK gapped down on the open in ’sympathy’ with CROX.  It had been on my watch list for the last 2 weeks and I had previously posted the chart below on the blog as a potential bearish wedge.

After gapping down, DECK had retraced almost back to break even before falling again. Towards the lower end of the opening range high, it began forming a bearish flag. I entered on a break of the bearish flag.

Price declined in an orderly manner, and accelerated to the downside before it began to bounce off of the 123.6% Fibonacci extension. I took partial profits at it bounced from that level and tightened my stop. The trade stopped out shortly there after, and I ended up with a gain of a little less than 3R.

DECK looks to have the potential for some more downside here, especially if the market &/or retailers head lower.

XLF – Financial Sector & SMH – Semi Holders update

Over the weekend I posted some thoughts on the indexes. The Financials & Semis have come the closest to breaking the levels I mentioned.

These levels are important because they signal that the recent trend of ‘higher highs and higher lows’ is broken. Now that doesn’t mean the trend is bearish all of a sudden. When those levels are broken, there is definitely a much greater likely hood of the short to intermediate term being bearish.

Take the semis for example (see below), I’d say they are neutral at best and bearish at the worst.

JASO – JA Solar Holdings Co – Base & Break

Lesson: Have more conviction with trades that setup and confirm with such strong volume. Have vision, anything can happen. Trail your stops and at least let part of the position run.

Re: The FSLR trade. It was nothing special (as it had little follow through and a lack of volume) and I figured it would be better to explain JASO in depth as opposed to hurry and post both trades.

FSLR could setup to run tomorrow. It will need more volume, but do keep it on your watch list.

POT – Potash – Symmetrical triangle break down

Just wanted to get a quick post up before I head out and take care of some errands. Late in the day I had a nice short side trade on Potash, which broke down out of a very cleanly formed symmetrical triangle.

I liked how the base of the triangle was just below the R2 pivot point. I entered short on a break down of the 182.50 level. I placed my stop just above 183.25.

My target on the trade was just below yesterday’s high.

If you take the height of the symmetrical triangle (~2.35) and subtract it from the break down point (182.50), you get a target of about 180.15. POT came close to that point (it’s low was 180.33). I was aware that yesterday’s high was at 180.19 and the R1 pivot point level (180.59) could potentially act support and indeed it did.

I closed out the trade for a little over 2R as price started to bounce off the R1 level.

Later I’ll post my trade of FSLR and JASO.

FSLR – First Solar coiling up for a big move