BEAV Trade Idea (short)

I have a lot of charts I have picked up through a quick scans that I'll be reviewing so I may be a little late on email responses, if you have an urgent email, please put 'Urgent" in the subject line.

I've been looking at BEAV and like this as a potential short sale candidate, here's why...

 BAV has already topped, as you know I never like to short a stock on the first break of support as the market trend has been pretty consistently coming down on the side of volatility shakeouts, it doesn't mean that the top pattern isn't reliable, it is just tactical positioning and shorts who follow the dogma of technical analysis that tells them to short a break of support or a failed test of what is now resistance, has been not working for some time. The volatility shakeout after a break of important support knocks a lot of shorts out of their positions, but since we are aware of it, we can use it to our advantage in getting better tactical positioning (the higher we can short, the less risk there is, although it is emotionally difficult to short in to strength, it is often the correct course of action). Furthermore longs typically will come back in to the mix after having been throughly brainwashed to "Buy the dip", which adds extra downside momentum when the stock breaks again below support. The GLD had fake trade is one of the best recent examples of this.



 Note the small triangle with volume confirming just below resistance, this is taken by technical traders as a continuation consolidation, they will typically short this pattern, a break above the triangle will stop a lot of those shorts out, but give us a better entry.

 The 60 min chart is ugly, I have little doubt BEAV is in trouble here, that doesn't mean a volatility bounce can't be executed in the near term and with that triangle so mature, it looks like it will come sooner rather then later. Note the gap area, this is right in and around the resistance area, a move in to or above the gap would certainly be worth investigating further for a short entry.

 The 15 min chart has a slight leading positive divergence suggesting that BEAV will indeed break to the upside, the opposite of what TA traders would expect.

The 2 day trend channel has held BEAV well, it has already broken the uptrend last Friday, the current stop would be in the $46 area, although depending on how it plays out, I would be willing to give it more room if an entry can be had in the area.

I would suggest setting some price alerts for a breakout of the triangle and above resistance. I'll have this on my watchlist as well.