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Thread: BAC/C Reversal?

  1. Default BAC/C Reversal?

    I've been watching these two for the past week or so as they climbed up on the good earnings from banks - and pretty much took it all back these past few days. I've been having a good ride with BAC short but am wondering if its ready to reverse the trend? It fell significantly less than it did yesterday and even had a little bit of a rally this morning. Although, if the overall rally reverses then that would seem unlikely...

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    I have been watching GS on the daily chart to see when it will start to make lower highs. I am using GS as a signal to short it and XLF. GS is just now making a lower high on the daily 15 minute increment chart, but I will wait for atleast another one, and now probably a third before I jump in and short any banking stocks.

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    C definitely deserves a close look. The chart pattern is a classic reversal formation. First the breakout above the trendline and second a retest of the trendline, third a sharp advance.

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    You have a point there, but one of my own trading rules won't allow me to participate in any actions with a stock that isn't at least $5.

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    Correct me if I'm wrong Rage, but I'm guessing this is because of volatility? Why is it common to generalize price as representing a stocks volatility? For example, Scottrade doesn't allow you to short stocks underneath 5 dollars, for the same reason I'm assuming. But doesn't volatility not depend on the price of the stock but on the standard deviation? I realize a low price representing high volatility is an easy short cut for a broker like Scottrade, but wouldn't you want your rule concerning volatility (if it does) to relate to a better measure of volatility than price?

    I'm only bringing this up because I believe C has been thinking of a reverse split which would bring this stock within your trading rules.

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