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CHRS- This Time On The Short Side

|Includes: Ascena Retail Group Inc (ASNA), BKS, NFLX

One of the greatest mental obstacles that a trader faces is shorting a stock that he previously bought long, and vice versa. Often, that is exactly what separates a novice trader from a professional one.

On January 2nd, I recommended to take profits on our long trade in CHRS. We ripped 36% on this trade in 33 days and I decided to take profits and wait on the sidelines for a possible re-entry on a dip.

Since we exited the trade, the stock gradually started to decline and it is now showing signs of a strong downturn momentum: The stock has no technical support between the price levels of $4.5 and $3.4, it experienced an upward Gap at the $4 area that has yet to close, and the stock tends to spike or plunge in highly violent and swift waves. 

Now, it is imperative to emphasize that in contrast to previous short recommendations on BKS or NFLX, this time- I have not found any inherent accounting issue with Charming Shoppes, Inc. This trade is based on a technical- statistical basis only and we are making this trade since the odds for a plummet are stacked in our favor.

I recommend to short the stock ONLY if the price of $4.5 is triggered. The entry price in that case is $4.45. The stock is currently trading at $4.7

I will maintain timely updates on this trade.

Disclosure: I am short CHRS.