Our DE Core Short

DE is one of our core short positions that's in the green, it just saw a downgrade from WFC today from "Market Perform" to "Underperform", of course CAT which is another we like short (although I wouldn't have both unless they were treated as 1 trade for risk management purposes) is taking a sympathy hit.

If you like DE as a short, I don't think it's too late, but I wouldn't chase it here, I'd wait for a bounce to sell / short in to some strength. Our average entry is $88.83.

I do think a gap fill is very possible, maybe even in an F_O_M_C knee-jerk reaction.

 This is the intraday drop in DE which is losing downside momentum, that can open the door for a releif bounce.

 This is the daily chart of DE, today's break was serious at -3.56%, there is a gap though just overhead-if I was looking to add or start a new position, that would be my minimum target area.

 The 3 day trend channel (a lot of room) shows when DE broke the trend at the red arrow, we see the typical volatility after a break.

 Here's where the trouble really is for DE, you can see the 2009 accumulation , but the recent  or last year's distribution has been exceptional to be leading negative on a daily chart and to new multi-year lows, this is why this is more of a core short position which I can be patient with and not be concerned with expirations or time-decay, just let it do it's thing and the past core short positions treated the same way with good entries were double digit (most in the 20+%) gainers within 2 months, I'm looking for a much longer trend here.

 The 4 hour chart which is very important shows the last run of accumulation in August and what looks to be clear selling of those shares in to higher prices and even short selling as we are at a leading negative low below the August 2012 level.

I know DE is not a SEXY stock, but this is one of my favorite short plays for longer term trending.

 the 60 min chart looks to have seen heavy distribution, perhaps someone knew something before the downgrade.

You know the breadth charts I post, like Percentage of stocks above or below their 40-day or 200 day moving average and I've been showing you how more and more stocks have been falling behind as the market moves to new highs or near all time new highs, this is trouble in breadth and a warning flag. This is what it actually looks like other than the breadth indicator charts I post.

Now when I go to look at "% of stocks trading below their 40 day moving average", DE will have joined that group as it broke below the yellow average, even as the Dow itself is near all time highs.

 The 10 min chart also shows the probability of some advance knowledge of trouble in DE as there's sharp distribution at higher prices.

Intraday the 1 min chart is not very positive, this is the weakest relative positive divergence possible, but since the selling is drying up for today thus far, any smart money/large positions will look for a move higher to continue to sell in to, they'll even put some money in to DE to bounce it higher, get buyers interested and sell in to that, it's a small investment that helps out their closing of the position, Cramer talked about this in his manipulation video which is the most honest he has ever been, he's a smart guy, he's just not playing for who he says in my opinion.

Keep an eye on DE to fill the gap, it may be a GREAT opportunity.