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Make some adjustments

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In last night's market wrap for premierinvestor.net, I profiled shares of Overture Services (NASDAQ:OVER) $16.91 as bearish should the stock break below yesterday's low of $18.00, with the thought that bulls might throw in the towel and have the stock dropping sharply on capitulation. Bears got the break they were looking for.

Now I'm going to "fine tune" my retracement. It's a slight adjustment, but now reflects our stopping level of $19.40 and builds the target for bears at/near $12.76.

Overture Services Chart - Daily Interval

The above retracement is slightly different that that shown in last night's market wrap and in early commentary on OptionInvestor.com. In today's market monitor on OI, I profiled OVER as bearish. By "sliding" the 61.8% retracement up to $19.40 (profiled stop) we can perhaps trade like a market maker with the thinking, "until some buyers show up, I need to be bearish and protect against $12.76." This has you and I perhaps shorting/putting the stock and targeting the $12.76 level where a market maker might then be bidding some inventory, or covering some short inventory. The first "hurdle" for bears would be the past relative lows of $15.00.

Same thing with Serena

I'm going to do the same thing with Serena Software (NASDAQ:SRNA) $13.59 -2.86%. Bears short/put on the break of yesterday's low from an "inside day" will have a stop just above yesterday's high of $14.62, or not further than just above the 38.2% retracement of $14.93.

Serena Software Chart - Daily Interval

A bears will often times return to a "food source" from time to time to fill their belly. PI bears got a nice trade out of SRNA earlier this month and the "inside day" from yesterday provided a lower risk entry point after the recent rally. With regression overlaid, bear is establishing a short back in the upper channel. The first hurdle is to break below the mid-point of regression and look for a trading target short-term of $11.82. A good flush might find a bear's belly fuller at the lower end of regression at $10.20. I'm still rather "edgy" as the NASDAQ-100 Bullish % ($BPNDX) is now in "bull alert" status. For a bear in technology, that's equivalent to the possibility that a hunter is sitting near a bears favorite food source.

Smart bears should be "checking the wind" for signs of danger. Entering bearish positions cautiously and constantly ascertaining risk/reward. It's those complacent and careless bears that end up as rugs on the den floor!

Jeff Bailey
Senior Market Technician
Option Investor

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