Friday, January 4, 2008

MA Might Be Headed to its 200 sma


MA is currently exhibiting a pattern that looks very similar to the path it took from May '07 to Sept '07. As you can see in the chart above, MA gapped higher in May '07 and consolidated in an upward tilted pattern. Well the stock gapped higher once again in Nov '07 and is now exhibiting a very similar pattern to the May-Sept period I just mentioned.

Now, when the stock broke its 50 sma in August, it took a very large tumble (30 dollars). That's exactly what I'm looking for now, early in the new year. The stock is currently trading near its 50 sma. I would look for a solid break below its 50 sma, preferrably on a gap lower, and a close below the 200 sma before beginning to short the stock. You'll then have a stop out point above the 50 sma and profit potential of all the way down to the 200 sma (around 25 bucks).

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