HBI Chart Request

HBI is a short trade idea originally from July 22 I also posted a subsequent follow up on 7/26.


Here's HBI now...

 Here's the original idea at the white arrow and the follow up at the yellow arrow. There was a clear bear flag, which is exactly why I posted a stop around $32 in the original idea and said this in the follow up,

"It wouldn't be uncommon to see a move out of the bear flag to the upside, which would be fine. I'd like to see the small breakaway gap remain unfilled."


The bear flag is too obvious, I fully expected it to be gamed, even though HBI is bearish, Wall Street still plays their games.

 Here's the 60 min. 3C chart showing the top and negative action in the bear flag, this is the most important of the intraday timeframes and shows HBI as being a solidly bearish stock.

 The more detailed 15 min chart also showed the top reversal and more importantly, we have good confirmation through the various timeframes.

 However, yesterday the 5 min chart put in a positive divergence.

So did the 10 min chart.

This leads me to believe HBI most likely will be gamed a bit. Technical traders are too predictable and it makes it too easy for Wall Street to take advantage of their predictability. For a technical trader, a bear flag is to be sold short, our trade is based on a longer term view of bearishness. It would not be uncommon to have seen an upside breakout from the bear flag, instead we saw a downside breakout and what will likely turn into a Crazy Ivan shakeout. For our newer members, I have coined the term "Crazy Ivan Shakeout" from the movie, "The Hunt For Red October". You may remember that the Russian submarines would use a maneuver called a "Crazy Ivan" in which they would turn 180 degrees to see if any enemy sub marines where following in their prop-wash, an area they would have difficulty in hearing another sub, so the maneuver "cleared the baffles" and then they would head back to their original course.

For trading purposes, my "Crazy Ivan" is a double shakeout, first the shorts that entered on the break of the bear flag would be stopped out as price rose above the bear flag, making the pattern a failed pattern. Most technical traders will enter the trade in the opposite direction (long) on a failed bearish pattern. Finally the trade would move bak down below the bear flag, stopping out the longs who just entered.

I feel there's a decent probability we will see a Crazy Ivan in HBI. I still think the trade is a good short and may offer a better position, like I said, the trade was not based on the bear flag, but the 60 min 3C chart.

I would set some alerts, this may be a good second chance shorting opportunity at a better price point.