In trading one must learn to be flexible and change their outlook when PRICE signals you do so. Below is an example of this with the chart of PAG and how we originally looked at it in our Wednesday 9/14 Game Plan. Shorting leaders is a tough game and this is a good look at the round number theory as well. We advocated a short at the very round 50 number, corresponding with a bearish candlestick, but it continues to act bullish and in our second chart we look at the present situation.
PAG is a best in breed auto name higher by 16% YTD and lower by 4% over the last one year period and sports a dividend yield of 2.3%. It has solid earnings momentum with 3 straight gains of 4.1, 11.2 and .8% on 7/28, 4/26 and 2/11 and a drop of 5.3% on 10/29. The stock is on a current 9 week winning streak higher by more than 40% and this week is higher by 4.3% thus far. It found a nice double bottom at the round 30 number this January-February and the week ending 7/8. The 3 weeks ending between 1/29-2/12 with all CLOSING within just .33 of each other at the round 30 figure led a run to the round 40 number. Today PAG found a roadblock at the round 50 number recording a bearish shooting star. Short here and look to cover and go long in the low 40s.