Could be the perfect storm

My plan Monday, June 6th, is to short my second stock BEN. To me it looks like the perfect storm or setup. The first rule is that the market index has to be in a down trend. The index to follow here is EFA or the European index. The EFA has been in free fall for a few weeks now and if you look at my current chart to the right, you will get the picture. Ok now that you reviewed that chart, let’s move to the next phase.

Because we are going to short the stock, banking that it will go lower, do we care about the stocks bottom line? I guess a little, but if the market is going south and the money managers are selling the stock, it doesn’t really matter how good the stock is, it is going down. Four weeks ago BEN crossed the up trend line. Two weeks ago it broke through the 50 week MA, but did not clear it. This week, it cleared the 50 week MA and broke through the first major support line. The RSI closed below 50 2 weeks ago, so everything is pointing for lower lows. Take a look at the chart to the right.

If you get this many items in your favor, it would be wise to take the investment and run with it. I will jump on this Monday unless the markets take off. Either way, I will be looking to short this stock very soon. If you jump in, remember to use the trailing stop.