FULC fades after a big move for a SHORT tradeFULC a biotechnology firm with a mixed earnings report early in the month just
printed a big move and then stalled at the NY lunch - hour and faded. Will the fade
continue or will there be an upward continuation? The 15 -minute chart seems to suggest
a downtrend:
1, The volume profile shows heavy trading at the top. This could be short sellers and
late-coming long trades. Once a trend down is underway, the short sellers will begin to
take profits buying to cover while the long trades will sell at a loss. Probably at this level
there will be more longs exiting than shorts until a substantial fall dictates the latter
to buy to cover.
2. New short sellers will pile into the trade pushing price down while few new long traders
will participate in accelerating the move down.
3. The relative strength on that indicator falling confirms the trend as does the Average Positive
Directional Index falling with the combined falling as well.
4. The mass index indicator documents a reversal
Accordingly,
I will take a short trade and assist the trend down in my own little way. I may take a trade of
100 shares and then sell a call option. In the meanwhile, I will take a put option striking
$5.00 for September 15th. I expect a decent realized profit from these trades in this
at least currently high volatility biotechnology penny stock.
