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3 Stocks Trade Setups: 2 Longs and 1 Short

June 22, 2012 – Comments (2) | RELATED TICKERS: OSTK , ABC , FSLR

I haven't been actively trading in the market today, mainly because the market is really hard to predict with the massive sell-off yesterday whether we just bounce right back up, or we go further south from here. 

In particular, today just felt like a massive short covering, so there's not much to lead me to believe that today is more than just a dead-cat bounce. On the other hand, I've experienced quite a few 'unpredictable-markets' in my life time, and I've seen it that even with a heavy sell-off like we had yesterday, that the market can wipe out those losses in 2-3 days when the dip buyers step in. So I don't want to pile on the shorts here either. 

I've provided below 3 setups that you can take advantage of today, or when the market has better conditions to take advantage of. The choice is up to you. 

Here's the chart. 

LONG: Overstock.com (OSTK) - nice ascending wedge here, and a breakout above $7.05. Once that happens, it could really fly, particularly past minor resistance at $7.20 .

SHORT: First Solar (FSLR) It's done alright lately, moreso of a deadcat bounce, but it is finding resistance at the 50-day moving average and has a clear bear-flag pattern that is forming. This is a high risk play to hold overnight, so I wouldn't recommend this play to risk-averse traders. 

Here's the chart.  

SHORT: AmerisourceBergen (ABC) Nice wedge breakdown, and could easily have a $3 downside to it before seeing any resistance. Idea entry is at $37.95 or higher. 

Here's the chart.