Wang’s Happy Trading

Submitted By Luck-o-the Irish

Several days ago, Happy and I both pointed to the OIH as a possible put play. We had talked the night before and both saw similar things with the chart. OIH had been strong, but recently pulled back from its highs around 195. Upon looking at the chart, even though it had pulled back almost 10% in a little over a week, we both agreed there could be significantly more downside. Here is a chart that shows you what I saw on the OIH. Upon closer inspection, I saw what turned out to be a megaphone pattern, which usually signifies a bearish trend is forthcoming (or at least a drop below the pattern). Furthermore, towards the end of the megaphone pattern, you can see how the RSI is in a downward channel AND crossing the midpoint, which is one of my favorite things to key on in conjunction with the MACD. At the exact time the RSI is failing, we see a crossing of the MACD. All of this was preceded by lower than normal volume, which is a huge red flag for a stock/security that is forming a megaphone pattern. Lastly, we can see, on the left side of the chart, that once the stock fell into the low 170s, there was very little support until the low 160s. Furthermore, at the second vertical line I’ve placed on the charts, we see a second failed attempt to get above the midline of the Bollinger Bands AND a subsequent drop below the 50 day moving average. I didn’t load the boat on this one, though in retrospect I should have.