Brush Engineering BARF

Discussion in 'Stocks' started by michaelscott, Jun 20, 2007.

  1. In another thread, I pointed out this obvious Bump and Run Formation. It is this formation that has been responsible for the majority of train wreck indexes such as the Tech Bubble/Crash of 2000 and the homebuilding stocks of 2004-2005 that came down in short order.

    The basic premise is that a stock or index is traveling up a certain trend line, usually at about a 45 degree angle. Then that same trade vehicle all of a sudden jumps to a much steeper trend line and then suddenly jumps to an even steeper trend line.

    As the trend line gets steeper, so does the expectations for the company. Unrealistic expectations are developed that the company cannot possibly obtain and then eventually the stock or index comes crashing down.

    Look at my chart and can you guess the new resistance and new price target? The new price target is the bottom trend at $24.

    I do not know anything about Brush or the materials that they make or the business that they are in. I have not read the 10-Q or any other fundamental information. However, this is a chart that I have seen many times before and experienced.

    Few stocks or indexes can parabolically climb like this one and the only conclusion is a crash sooner or later. Once this gets down below the 200 day moving average, I would feel safe in shorting it.

    Remember Jones Soda? Same principle at work here...

    I would not short a chart like this until it made a big drop like today. You never know how long the stock will go up for, but eventually it does fall. It doesnt pay to fade.
     
  2. nkhoi

    nkhoi Moderator

    I def need to work on longer timing :D
     
  3. "In another thread, I pointed out this obvious Bump and Run Formation. It is this formation that has been responsible for the majority of train wreck indexes such as the Tech Bubble/Crash of 2000 and the homebuilding stocks of 2004-2005 that came down in short order."

    It wasn't a chart that caused the home builders to fall. Their fall caused their charts to change.
    A word to the wise is sufficient.
     
  4. Like I said, I dont know anything about Brush nor did I read or listen to one word of the conference call. I dont know anything about homebuilding or the business of real estate except for what I experience in my personal life and what I read in the rags and see on television.

    I do know that a chart that climbs the high pole like this one will tend to fall abrubtly and dramatically at some point in time. Its a matter of getting in on the low end of the pole and then dumping at the high end or vice versa with shorting. Finding the target prices of this parabolic stock during the high climb is the tricky part.

    However, I believe a short under the 200 day moving average would make sense and be the obvious trade. Im wondering if it will pivot off of the 200 day. Hmmm. Lets see.