SGR (Short)...

SGR is a new short pick. It reported earnings late last week, so that's not an issue for another couple months. SGR broke down convincingly through multi-month support at $26 (the purple line). It then proceeded to gap up on heavy volume on Thursday, but was unable to reclaim that level. It gapped down hard with even bigger volume on Friday following earnings (which I did not think were bad enough to justify this drop, but the market doesn't care what I think), and today it rallied a bit into that gap-down. A stop above Thursday's high just over $26 would work nicely. I believe SGR will rally on low volume up towards $26 and fill that gap-down, and will then proceed to fall further. I would not be surprised to see SGR return to the March lows at $20 (orange line), but I will give it room to rally a bit first to improve the reward/risk ratio. At the present $24.50 level, it's $4.50 reward for $1.50 risk. That's 3:1, which is pretty good, but I'd like to see that improve a little bit more.



Position: none