Trading in the opposite direction of a prevailing trend is a dangerous and usually costly tactic. APC is trading inside an uptrend channel that is clearly visible on the accompanying graph, however a failure of the stock to reach the upper end of the channel is often an early warning that the lower line will be broken. That will mark a beginning of a down trend.
For this setup to work, APC most reverse direction without touching the upper line, right now the stock is going high, if APC reverses, I will be initiating a short position at 40.
The three weekly averages are in disarray, 10 is above 30 but they are both below the weekly ema(40), for APC to continue up, the stock must pass the 52.5 level reached at the beginning of may, a weekly close below 42 will definitively constitute a signal of closing all longs but not necessarily a short sell signal. Considering my belief on the weakness of the market now, I will start the short at that level.
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