This is a quick response to the tweets and emails I’ve been receiving concerning the pain people have experienced in HLCS this week.
It all started Monday night.
I sent out a premium blog to the members of Bulls featuring HLCS. I called it ‘my favorite setup’ for Tuesday. I was looking for a ‘long scalp or swing IF it gets to 1.10’.
On Tuesday, it did just that, so I took a position at 1.10. I ended up holding overnight because of the volume strength AND it finished above SMA50.
On Wednesday, it gapped up and I took 1/2 off the table…. before long, it started to pull back WITH volume. The second it fell back below SMA50, I sold the remaining balance. There is no reason to assume it will reverse back up when the downtrend is supported with volume. Also, HLCS has had numerous problems breaking and holding SMA50.
Look at this chart – http://stockcharts.com/h-sc/ui?s=HLCS&p=D&b=6&g=0&id=p10832091529
You can see the SMA50 fails in the past. The pullback Wednesday was time to exit and STAY out until it pushes through SMA50 again. Yes, we have support here, but I don’t like it until it shows it really wants to turn out of a brearish decline. This means over SMA50 and staying there.
Hope this note helps.