Patience Could Pay Off for Arrow Bears

06/07/07 - 08:47 AM EDT

Dan Fitzpatrick

Anything around, say, $40.90 or so would be a low-risk short entry because of the proximity of the buy-stop. Put the buy-stop up at $42.10, just above the June high. If the stock moves that high, you don't want to be short.

My downside target for this stock is $35.

Updates on Open Positions

  • Assisted Living Concepts (ALC Quote): The stock offered the short entry at $11.60 on June 1, with a buy-stop at $12. The stop can be lowered just a bit, to $11.90. Shares closed at $11.26 Wednesday.
  • Lam Research (LRCX Quote): The short entry of $53.80 was hit on May 31. The original buy-stop was $56.05, but that stop should be lowered now to $55.05. The stock closed at $52.59 Wednesday.
  • Mattel (MAT Quote): The May 31 market open offered a short entry of $27.75. The stock is trending lower, with the stop set at $28.70. That stop remains unchanged. Mattel shares closed at $27.35 Wednesday.
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At the time of publication, Fitzpatrick held no positions in the stocks mentioned, although holdings can change at any time.

Dan Fitzpatrick is the publisher of StockMarketMentor.com, an advisory newsletter and educational forum dedicated to teaching effective risk management and trading methodologies to aspiring traders and investors. He is a former hedge fund manager and a member of the Market Technicians Association, and he now trades from his home in San Diego, Calif. While Fitzpatrick holds various securities licenses, he does not give recommendations to buy or sell stocks. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. He appreciates your feedback; click here to send him an email.

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