HLF is probably one of the last stocks in the world anyone would want to short with Carl Icahn, Buffet and some other big players long as well as some of its behavior like the day the "Knock-out blow" presentation to prove HLF was an Enron scam that was going to zero by Bill Ackman sent the stock up for it's largest 1-day gain ever, the same day we shorted / added to an existing short.
However if you let all of the talking heads and your emotions get involved, you miss some good opportunities that may otherwise be giving you solid objective evidence, that's what happened when we took the HLF short.
I do see somethings worth mentioning. I took on HLF as a long term core short, not a trading position so I probably won't make any changes unless there's more that develops.
However if this is a trade that you like, but just never had the opportunity to get in to, there may be a chance so set those price alerts on the upside just in case.
This is the current short position in HLF with a +22.6% gain, there's room to add here, but only at an advantageous spot.
The daily chart shows a H&S top that first caught my attention, it is volume confirmed. Here
you can see the 3 places I'll short a H&S and how these technical price patterns are used against technical traders, but knowing that, you can use it to your advantage.
The first place I'll short is the top of the head. The second is the top of the right shoulder. Unlike what Technical Analysis teaches about price confirmation, I WILL NOT SHORT A H&S AT THE BREAK OF THE NECKLINE , traders who short here seem to always get shaken out as H&S tactics from Technical Analysis textbooks are no longer how these price patterns behave.
There's almost always a shakeout of the new shorts with a move back above the neckline which in traditional T/A is not suppose to happen, price is suppose to fail at a test of resistance/neckline and that is the second spot TA teaches you to short a H&S. However, as you can see, more often than not, they run price right through resistance and shakeout all of the shorts, THIS IS THE 3RD AREA I'LL SHORT A H&S AND USUALLY THE LAST.
In fact our last entry was at the shakeout.
Looking at the shakeout to the right on a daily chart, the day HLLF was up +25% is the day we entered, it's also the pivot for the 3rd area I'll short a H&S, the shakeout move.
If you look at price in the yellow box it just looks like a sloppy sideways consolidation and no upside threat.
However, to make money you have to, "
See what the crowd missed". Using a 5-day chart, price action looks a lot different doesn't it. In fact it looks like a clean reversal process for an upside bounce.
The 30 min chart even has a positive divegrence through the area so I think there's a good chance of an upside bounce,
if you are interested in an HLF short, this is the time to look at setting upside alerts and looking for the entry.
I do see the same positive divegrence on a 10-min chart, but it looks to have deteriorated recently which has not hit the 30 min chart yet and it may never, but I'm not worried about a counter trend bounce in a long term position trade and with the recent deterioration, I'm not even sure we get it.
You can always play it safe and take your gains off the table and see how it works out, but I'll just set some alerts and leave the position in place and trade my plan.
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