Monday, January 7, 2013

Suntech Loses Momentum ($STP)

Suntech Power is down 16 percent today and is now showing the dreaded "broken parabola" pattern that occurs after manic runups in troubled stocks.

Since many of the recent buyers don't have a valuation and their desire to own is conditional on upward momentum (which was a positive feedback loop), they will blow out the shares now that it has lost momentum (now an adverse positive feedback loop).

I believe that the highest EV time to short these is after the broken parabola.

No comments: