RE:The Short Setupstarsearcher40 wrote: Phew. What a day.
Imho, most of the day from noon onwards was a massive short setup. The stock appeared too strong. Too relentless. I wouldn't be at all surprised if much of the trading this afternoon was orchestrated to prop the price up as high as possible, set up the short with as many shares as possible, and then unleash. I mentioned the "hard-drop" yesterday, but it didn't happen. Well it certainly did today! Almost $2.00 in a matter of minutes. Geeze, to have the power at my disposal to move a stock like that!
So the shorts have control of the stock for the time being. The other day we were high-fiving $19.76, and now we're fretting it. Psychology is a funny thing in the market. The question is, if this setup was as significant as it appears, how hard can they now push on the stock?
It's a tough call. The chart is uncharted territory, so there really isn't an established floor. This will come in time, as the chart gets painted in this new territory, but for the time being, I think we may be in for a bit of a wild ride with not a lot of reference points.
The first well-established floor is $17.00 . I'd be surprised if we got that low. It depends on the strength of the short position and how much damage they can inflict. Support shows up at $16.00 as well. Below that? Well I highly doubt it, but if the stock wants to gap fill, that's all the way to $13.00 which would be shocking.
For the longs: Go out and get some fresh air. We have been here before, several times, and each time the stock goes down, however much, we ultimately end back higher in the end.
Swing traders: Could be a play there, but the ride could be a little violent and unnerving.
Traders; Again, I'm not trading the stock, but this is actually one scenario where I DON"T like buying i.e., catching a falling knife against an unestablished chart backdrop. For myself, the risk/reward ratio isn't there in this scenario. I'd much rather buy in, higher even, on established levels on the charts....NOT guessing more out of thin air and hoping I'm right.
I'll say this again (mostly because I'm not sure if PBmoney had his Snicker's bar yet). Retracement and retesting are a completely natural and healthy part of any overall rise. When the short position comes to the foreground with a vengeance, it's still the same process, just significantly more exaggerated, and at times quite gut-wrenching. Of course the short goal will be to bring people to want to sell (protect profits), or have to sell (margin calls), or beg to sell (fear is a powerful motivator) which then plays right into their hands. This often ultimately ends in a moment of complete capitulation, when the most significant selling happens and the pain is simply excruciating. Ironically, it's the time when the pros will buy and the shorts will then cover. Will this happen with WEED? Hey, it happens with any stock. Outright manipulation and market psychology drive the bus when the shorts are in control like this.
For myself, I'll just ride it out. The position I have in WEED is committed to a longer-term plan that will make even the worst short downside move be ultimately irrelevant. But to be sure, it does piss me off all the same when it happens! Read: Last Spring/Summer from $14.00 down below $8.00 was NOT fun, except that I bought a lot more shares at the bottom at that time. I'm "all-in" now, so the capacity to load up further on some monster-dip just won't be there in the same way as it was last summer.
We'll see what tomorrow brings. I can say without a doubt that we should be somewhere between $13.00 and $25.00 The craziest thing with this stock right now, is that either scenario is possible!
excellent post.