Trade Idea PFE (Short)

PFE reported today, they beat EPS by $.03 with in line revenues, but they lowered Full Year 2012 guidance. You've seen it many times, a company beats and sells off or the miss and rally, it because what they did doesn't matter, except within the context of sentiment regarding what they will do and lowering guidance is a very clear way for analysts to make up their minds without a bunch of guess work, as such, PFE is being punished today, but it looks like just the start.

 This flat range with small bodied candles is indicative of distribution, the fact RSI went negative is a bonus, and the large volume spikes from last week, a possible earnings leak.

 Stochastics which has been embedded, is now crossing down.

 Cutting through the noise, a 6-day chart of my custom De-mark influenced buy/sell indicator has hit the bottom and every top thus far and is giving a sell signal now.

 Price Volatility was large at the last minor top and large at the bottom, it has been very narrow through the period of distribution I mentioned before, but seems to be picking up again now.

 The X-over layout just gave a short/sell signal today, usually we will get a decline before the first pullback to the 10-day average, so PFE might not be so bad right here.

 The Trend Channel gave a sell signal last Friday, now that the earning wild card is out of the way, this looks to be a high probability, fairly low risk trade.

 The daily 3C has shown distribution has been very heavy at the recent top.

 The 60 min chart confirms it and suggests a lot more downside off this top then the previous two.

 The 30 min 3C chart confirms the same and shows PFE in a very ugly situation. It looks like smart money has left the building.

 A more detailed view on the 15 min chart also shows distribution in the flat area I mentioned.

 Here's a closer view of the 15 min.

 And the 5 min shows the same with a head fake new high being distributed .

 On the open today, the gap up was quickly sold off in underlying trade.

The Trend Channel would suggest a stop of $21.95, although you can email me if you want to look at stops more appropriate to your trading style.

I would consider a partial position here of maybe 50%, if we get any bounce then you can add, but make sure your risk management is set up before you enter the trade with that in mind. There's also nothing wrong with adding to a trade that moves in your favor, or you could add on the first pullback.