Stock Chosen Using Sector Watch
Using the techniques and information I mentioned in today’s stock market update, I found a great stock to short, MDU, a stock in the natural gas industry in the utilities sector. Based on the sector rotation, utilities should start hitting bottom within a couple of months.
I plugged the Utilities Sector into my favorite charting software, and found it showing a bearish trend reversal starting about the 2nd week in July. As I stated in the chart, trend reversals help you catch the middle 80% of a move.
Then I went back to clearstation.com and looked into the utilities sector, and looked through the water and natural gas industries. MDU then stuck out like a sore thumb; check out this chart:
MDU is showing a bearish MA cross over, a bearish 1-2-3 trend reversal, and increasing volume on down days.
The nearest support is the 200 day EMA, which is at $29.28 (closing price of 31.26), then at $27.75.
So, target short price is currently $27.75. If the 50 day ema crosses below the 200, I’ll change my target to 24.50.
Stop, currently at 35.50.
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