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Bears locking in gains on VeriSign!

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How low can she go? Who cares! In Wednesday's 03:00 EST Update, we profiled shares of VeriSign (NASDAQ:VRSN) $9.97 -45% as a bearish trade and the stock has been crushed after reporting earnings last night and lowering guidance. A bear shouldn't be risking further gains from here and should be locking in profits.

VeriSign Chart - Daily Interval

Wednesday's break below 80.9% retracement and a bearish vertical count of $8 tied in nicely to the lower end of our regression channel (see 03:00 Update) http://members.OptionInvestor.com/intraday/042402_4.asp. A bear should NOT be willing to risk a rally back to $18 for $2 extra downside (at least not in my risk/reward and account management strategy) and should be locking in gains. Take the cash and look for other similar opportunities.

In recent sessions we've seen some stocks break to new 52-week lows and bulls have been pulling the plug. Those that haven't and get an unpleasant "surprise" have been getting their horns handed to them.

Bears are feeding on such technicals and will stay with the pattern until they see some type of negative result. That's what traders do. Play patterns until one finally fails.

Jeff Bailey
Senior Market Technician
Option Investor

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