Trades of the Day – Short Opportunities in Chordiant Software (CHRD) & United Online (UNTD)

Posted By Tate Dwinnell |  Subscribe in a reader | Comment 1

Since there have been few posts in the last couple weeks during my vacation I thought I’d come at with you with not one but two great looking short plays.  I know it’s exciting but please to try to contain yourself.   First up is CHRD, a stock that broke down with record selling volume in mid August and has since retraced some of that move and is now meandering along resistance of the 50 day moving average.  Notice there is a bit of a bearish triangle formation there.  I want to see this stock go from meandering to making a definitive move from this sideways action.  That ALWAYS mean another spike in selling volume and will probably mean it takes out the triangle formation somewhere around 14.40 (or today’s lows).  There isn’t any support until around 12.50 so that would be a nice short trade if it can break down from here.

Next up is UNTD, which has carved out a similar path but over longer time frames.  It’s amazing to see how it dropped 14 of 15 days in late July/early August.  It’s no suprise that the stock has bounced back from those oversold conditions.  When I look for good short positions I want to see diminishing volume levels on these retracements after a big sell off and that’s exactly what we see in UNTD.  I also want to see it retreat from resistance levels, which we also see around the 50 day moving average.  From here, like in CHRD, I want to see selling volume come back into the stock which would probably be indicative that the stock is ready to resume the trend down.

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