After reviewing my watch list I decided I really could not pass up the set up in IPXL. Here is the chart:
IPXL has been one of the leaders of the current rally. It broke out of a beautiful cup with handle base well before the market indexes confirmed a new uptrend in late February and it has out standing earnings growth.
However, after leading most stocks higher for much of the advance it started weakening in late March and actually broke down on heavy volume in early April while the market indexes were actually getting stronger. It has now put in a low volume rally into the 20 day MA which looks very much like a bear flag to me.
My plan is to get short on a break down of the flag with a stop just above what I anticipate will be the pivot high.
The only other stock on my focus list which I highlighted yesterday is RINO.
I am anticipating a big sell off in this market in the near term and alot of investors are going to get caught wrong footed. That is quite simply the nature of the markets. Only a few will profit while majority will end up giving back all or more of the profits they have made in this advance.
When expectations were ridiculously low in March '09 and every one expected the worst any good news pushed the markets higher. The opposite is true now. Everyone is bullish and expect the markets to rally to the moon. However, any slight disappointment now will send the markets into a swoon.
I am seeing subtle signs that a correction is looming. Should IPXL confirm this bear flag today or next week I will feel a lot more confident about being 200% short this market!