ARIA And BXG

From Jan 30, on ARIA:

"In Friday's session, The ARIA Bulls came roaring back and took out Thursday's 15.15 high of the Bearish Engulfing pattern, but closed at 14.96, so Bears using a PRINT above Thursday's high were stopped out of their shorts. Bears using a CLOSE above Thursday's 15.15 high still are okay in their short position, but Friday's action certainly wasn't what they wanted to see."

That group of Bears also got stopped out of their shorts.

This stock has a penchant for squeezing the shorts pretty badly, especially during its stellar gain of 425% into the July, 2011 top, again in October, 2011, and again currently (review the charts from January 30th).

It's fine to have shorted that Bearish Engulfing Pattern at Red #3 of this current Bear Flag, playing it for a top, but "know when to fold 'em." That obviously was not a top.

Yesterday's breakout "could be" a Bearish Wolfe Wave 5 Breakout/Fakeout, which is a hallmark of a Bearish Wolfe Wave. The Bears got squeezed on Friday when ARIA closed at 15.48, above the high at Red #3, and they got squeezed again yesterday on the upside breakout of the pattern. Some Bulls bought the breakout, too, so the proverbial "everyone" was a buyer, and if it reverses to the downside, "everyone" was a buyer at the wrong time.

If it is a Wolfe Wave, they can be tricky. There sometimes is a Double Fakeout/Breakout where the stock goes back inside the pattern, breaks out again, then finally fails and reverses to the downside. My point is, have a stop loss so that it doesn't get out of hand on the upside. ARIA is making new highs here with no overhead resistance, which can be very dangerous for short positions.

Notice that after the breakout of the last possible Bearish Wolfe Wave, to Blue #5 and the question mark, there was no sign at all that it was a Fakeout/Breakout. It simply continued higher. Anyone who shorted the last pattern breakout, which was just below 13.00, has a problem here if they didn't cover it.

"Admit as quickly as possible when a trade goes wrong, take the hit, and move on."



BXG is a thinly traded stock that has had interesting price action since we looked at it in early January. The "Handle" part of the Cup & Handle pattern broke out in late December, 2011. The "Handle" is the Symmetrical Triangle, in blue.

The entire pattern had a couple of intraday breakouts that didn't hold on a CLOSING basis and the stock got sent down, all-ll the way back to the 2.50 low of the "Handle." Yeesh. That's a lousy performance out of the BXG Bulls ever to allow that kind of pullback, but they held at a low of 2.54, above the 2.50 Symmetrical Triangle low, and "they're baa-ack" near the top of the pattern.

A breakout suggests something slightly north of $4.00. The steady decline from the $4's in the first half of 2011 is resistance all the way up on a breakout, so this "extra" base-building here isn't all bad if the Bulls eventually can break it out.

It's certainly an unorthodox Cup & Handle! A takeout of 2.50 and 2.54 support would suggest a retest of the lows.