This comment was left the other day about BEBE:
Interesting you brought up BEBE Mike. Bounced off nicely off support at $15. I know that you are a day trader Mike, but do you ever take into consideration the longer term trend or are you purely there for the quick in and out type trades? BEBE has run up nicely for the best part of 2 years now, and the recent sell down may be the beginning of a longer term down trend for BEBE. However, the weekly stochastic is getting closer to a buy signal. What are your thoughts here on BEBE?
I always try to find the appropriate trend for the time frame in which I'm interested. So when I'm swing trading I might look at the 10, 20 or even 50-day moving averages to tell me the (intermediate term) trend. If I'm looking for a long term trade, like something for my IRA I might look at the 200-day moving average. I prefer to trade in the same direction as the trend one 'level' up. In other words, if I'm looking to swing trade a stock that's in a long term uptrend I'd prefer to find spots to go long that stock as opposed to shorting it. But there are cases where I'll trade opposite that higher level trend.
Having said that, BEBE looks broken to me on long, intermediate time frames (as defined by the 200 and 50 DMAs, respectively). The bounce it's had over the last few days is starting to look like a decent short setup. In fact, if I was still swing trading I'd be looking to short it under today's low:
It's tough for me to justify buying any stock that's under its 200-day moving average. However, if you trade off of weekly charts it doesn't look like a short at all.
Looks like a short off the daily to me as well. Nice retracement and shooting star bouncing against the 20 EMA. There was a short setting up off the weekly last week with that low range bar after the previous high volume wide range breakdown bar. Isn't hindsight great? :) Maybe if it breaks the 15 and then retraces abit there might be another short entry.
I see the same. Short candidate. High volume selloffs are the first few signs of a bigger correction/drop in stock prices. BEBE may only be a short term trade, but you will likely lose if you do a longer term trade with BEBE.
If you are looking into long term trading, find something that is still uptrending. Those are the easiest, care-free trading setups. The best positions are those buys during oversold uptrending stocks (with low volume during the pullback).
-Technicator.NET
Thanks for the comments. I can see the reasoning behind the short. I am aiming to trade longer term, however, my short term thinking always comes into play and I thought there might be a bit of a bounce play involved. I was looking at CRYP and CEC for similar plays but there may well be more downside for both involved. Thanks again guys. Great site btw Mike.