
Fitbit Headed Lower, Sell Now
The hype about Fitbit (FIT) - Get Report is amazing, given the earnings the company just reported. However, earnings may not be the driver of stock price behavior; the herd's mood toward the company is. There's no other way to objectively explain the decline today; or is there?
The daily bar chart below shows the pattern off the company's IPO, which peaked near $50, then fell to near $30, rose to near $42, fell to near $34, and then rose to near $42 this week. The gap lower today, raises odds significantly that the decision support engine's blue arrow path is in play, and at least a test of $25 +/-$4 is coming in the next few weeks to months.
Click here to see the below chart in a new window
Noticing that Monday's peak tested the upper Bollinger Band (purple dashed line), as well as the peak/reversal of the September peak/reversal, puts emphasis on the yellow box's highlighting that the action since the August low has been nothing but a sideways correction of the 40% slam from the highs to the low. Today's gap lower, below the Bollinger Band, triggers a sell signal in that indicator, as well as a peak/reversal sell signal, and a pattern sell signal. The lower high in stochastics diverging from the matching high in price, with the September high, triggers a bearish divergence sell signal, as well.
Combined, these signals create a condition whereby the decision support engine warns that selling actions only are indicated. Therefore, if long, sell stops should be placed at the $36.50 level of the 50-day moving average, while any bounce in the next few hours toward $39.50 being used to exit longs, too. If flat, either of these price levels can/should be used to establish short exposure. If already short, use to maintain or add to short exposure.
The $22 +/-$2 zone is where conditions will be ideal for the next decision support engine buy signal, when selling actions will no longer be indicated, and buying actions will be.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.









