Late this morning I received an e-mail from a subscriber wanting to know where to look to cover a short in Ciena (NASDAQ:CIEN) that was implemented off the point and figure chart. It pleases me (Jeff Bailey) to actually get e-mail from subscribers that are putting the tool to work. It displeases me that I didn't see this chart a couple of days ago, as shares of CIEN were set up nicely for a short at the $63 level late last week. Today a subscriber shorted the double bottom sell signal at $56 and is now looking for an area to lock in some profits. Here's what I'd be looking for.
Ciena Corporation (CIEN) - $1 box
One area I'd be looking to cover on the current chart is at the $48 or $47 level. The upward trend that I've place on the chart is nothing more that a 45-degree trend that could become the longer-term upward trend developing for the chart in CIEN. If that's the upper trend that institutions have for the stock, that's a place where a trader should be looking to lock in some gains. If shares of CIEN were to find themselves hovering near the $48 range when the NASDAQ-100 bullish percent were to reach the 50% level, I'd also begin lowering my stop in the trade to try and at least have the trade result in a profitable experience. Current bearish price objective with the column of O's building would be $39.
Only the strong survive, but for how long?
The Software Index (GSO.X) had been two of the stronger technology sectors, but today's decline has wiped out anything resembling near-term support.
GSTI Software Index 60-Minute/ Daily Chart
On the 60-minute chart, short-term retracement levels for the Internet Index - gone, 50 and 200-pmas - gone. The support level we are left with is the May low of 210 on the 60-minute chart. Moving to the daily chart we can anchor a new retracement bracket to the April low and the May high to figure what percent of our gains the Software Index is planning to give back. Look where the 38.2% level of our new bracket line up, right at the May low of 210. With the 50-dma still moving up, that gives us three technical points to act as support (May low, 38.2%, and 50-dma). Falling prices and a declining stochastic should set up the battle line at 210.
Adobe Systems Daily Chart
Using the same retracement bracket on Adobe Systems (NASD:ADBE) reveals that not one, not two, but three technical levels could be broken today. The nice up trend, 50-dma, and 38.2% retracement are all in jeopardy if ADBE closes at current levels. Further downside should find support between the previous low at $37.75 and the 50% level at $36.65.