I do not recommend anyone go short CBH as it is about to become TD, unless you don’t mind trying to outsmart the market. I know for a fact that newbies shouldn’t even be reading this section for any other reason that to learn. But both of these chart patterns were very bearish and both stocks looked like they are going to break hard. Well, it was then funny when a long-term platinum subscriber gave me the heads-up that TD is acquiring CBH. Kind of funny that both stocks involved were the ONLY two short candidates. I do not believe in all of my years of going long or shorts stocks that I have had the buyer and seller both giving me signals to go either long or short both securities. Since holders of CBH get TD, it doesn’t matter which one you go short as they are both going to be the same stock (TD) come March 31st. However, I am thinking that it is possible that one does much worse than the other, so I will still go short both, expecting one to do worse. What I am changing is how much I am shorting. If I was keeping my shorts to only a handful of candidates these two would never be in that list. Therefore, TD will be .25% of my accounts and CBH will be .25% of my accounts. They are not even going to make up 1% of my portfolios. So most of you probably shouldn’t mess with them but I am sure some of you need to get some action as we are all addicts to one degree or another–or else you wouldn’t be here. However, we are definitely functional addicts as for the second year in-a-row I have handily!!!! beaten my tax attorney/accountant’s buy-and-hold returns by a WIDE MARGIN! This is only my second year with this individual and I am sure I would be 12 for 12 if we went back to 1996. Besides these two as short candidates, there was nothing even close. As we all know, when there is nothing to actively invest in, there is nothing to do but hold that cash heavy. The last thing you should EVER do is force a trade out of boredom or out of the feeling of “I need to do something.” If you trade like this, you need to realize you WILL NOT make it to the next bull market where ALL OF US WILL get rich. You will lose your capital before the downtrend is over. Sure doesn’t look like a bottom yet does it? The proof is still with the bulls and CASH IS STILL KING!
new short positions: TD CBH
TD is breaking down below the January and March support and away from the downtrending 50 day moving average, on extremely strong volume. This stock started to look bad at the end of July into August. But when it gapped down on HUGE volume at the start of October all hell broke loose as the stock began selling off on very heavy distribution and red BOP. Since then it just continues to get worse as the selloffs went from lower volume to heavier volume by the time March came around. On a weekly chart you can count 16 weeks where the stock sold off on heavy volume with 5 of those weeks on HUGE distribution. With those NASTY 16 weeks, there are only 8 weeks where the stock closes higher and none of them come close to any of the down weeks. BOP has gone red again and looks ready to hit the max red soon. But the best bearish technical development is in the RS line as the line is currently WELL BELOW the 3/17 lows while price is still above the intraday lows–this is an extremely bearish divergence. Cut your final loss with a close above the 62.72 level or the 50 day moving average, if the stock does not move lower immediately.
CBH is breaking down below the March support to a new closing low for 2008 and away from the 50 and 200 day moving averages, on extremely strong volume. This stock is the mirror image of TD because IT IS BASICALLY TD and as of 3/31/08 it is TD. It doesn’t matter which one you short as they both will be TD by 4/1/08. Cut your final loss with a close above the 36.41 level or the 50 day moving average, if the stock does not move lower immediately.
