While poor performance in stocks typically sends investors looking for returns in commodities, that's not been the case for the last several weeks; in many cases, the best-performing resources are seriously underperforming stocks. For metal mining giant BHP Billiton (BHP), that's been precisely the case. While this stock had been forming an ostensibly bullish setup for the last several months, a breakdown sends a very different signal right now.
Since the beginning of November, shares of BHP Billiton had been forming an ascending triangle, a pattern that's normally thought of as a bullish formation. But just last week, shares broke below the pattern's uptrending support line, a signal that the pattern no longer held water. A breakout to the downside is more than just a "no go" signal, however -- particularly in a lower market.
A downward breakout from a descending triangle signals a strong shorting opportunity for the stock, one that's actually statistically more effective than the traditional upward breakout that would have bulls interested. If you're interested in a short play on BHP, I'd suggest placing your protective stop just above the trend line at around $78.As of the most-recent period, BHP showed up in the portfolio of Ken Fisher's Fisher Asset Management, comprising 1.6% of the total portfolio. It also showed up on a recent list of the 20 top-yielding metals and mining stocks.