Charting Beauty

Hey Gang:

Every once in awhile, a chart I set up to predict its movement goes "perfect." If it does what I anticipated it would do, which gives me some confidence to trade it. Take a look at CCJ. I initially set up my Ascending Channel by using the bottoms of 11/17/06 and 3/5/07, then moving to the top of 12/14/06 to complete the Channel, then "extend." Now technically, a line is supposed to connect three (3) points to be legitimate, but I do this method a lot to try to establish a pattern. In this case, it may have worked. Today the stock began at the Resistance line and has fallen off all day. You'll note the stock has been overbought (high STO) for awhile, and the MACD has started rolling over and heading down.

You'll also notice a Bearish Engulfing Pattern which I have circled in blue. This anticipates more downside is coming, more possible confirmation that a short/put may be a good play.

You could short this stock now with a good Reward/Risk ratio since the Stop-Loss is 1% above today's high (resistance) and your target is the bottom of the Channel. The Channel itself is over $9.00, so you could hope to capture most of that preferably before earnings. I would not play this over earnings, but get out before.

Just something to consider.

Happy Trading!