An Update on JEF, and a New Short Opportunity – HOT

By Christopher Diodato – TradersBase.com

 

Yes, yes, the symbol is actually HOT.  The stock is Starwood Hotels & Resorts.  Traditionally, it has been a growth stock, increasing over 150% since 2009, but growth stocks can not be growth stocks forever (even Apple).

Traditionally, a sure sign that a growth stock is peaking is when it gives out its first dividend after a long run up.  Strangely enough, this action has been correlated to a scarcity of profitable projects in the future, decreased earnings, and subsequently, lower stock prices.  A few examples of this phenomenon.

  • GPI:  A stock that I owned in early 2010.  It gave its first dividend after a 50% upswing, and has been in a sideways trend since
  • CSCO:  Perhaps they thought that giving a dividend would lure investors who are dividend hungry.  Apparently not.
  • MSFT:  Thanks to Ralph Nader, MSFT started giving out its vast quantities of cash.  How long has Microsoft been going sideways?

HOT is about to join the list, giving its first dividend ever a few months back.  My detailed technical analysis is in the video below.  Also included is an update on JEF, which actually gave a weak short sell signal on Friday.

Here are the charts of both, and the video is last.

 

See where that latest blue line was broken by those red O's? That's a sell signal!

 

 

 

For now, this is the bullet summary of what you need to know

  • Symmetrical triangle formation has not broken out yet, but has a bearish bias
  • Stochastic sell last Friday
  • Money flow index sell last Thursday
  • Point and figure sell last Friday

 

And the strategy

  • Enter your short sale with a $57.22 stop sell order
  • Your target is 50.00 (How I got this is in the video)
  • Exit by buying back your borrowed shares with a loss if it closes above $58.00

 

Happy trading!  This market can drive anyone nuts!

~Christopher Diodato

Christopher Diodato

About Christopher Diodato

I have been trading since my eighteenth birthday to pay for my college tuition. It was at first rocky, but now trading is my love, my work, and my passion. In addition to my experience in markets, I have passed all three exams to obtain the Chartered Market Technician (CMT) credential. I believe that I am the youngest to ever do so! I want to help out small investors to make some money on the side. There's a common notion out there that "big money" rules all. I disagree. With enough hard work and discipline, anyone can become the next Paul Tudor Jones!