You've Got To Short This Stock
InTheMoneyStocks.com | Jul 21, 2016 02:59PM ET
3M Company (NYSE:MMM) collapsed on Thursday, dropping to $180.14 -1.28 (-0.71%). This follows Wednesday's all-time. While most investors marvel at the stock's move and want to buy, it is probably one of the biggest shorts or sells out there. There are so many negative indicators on all-time frames that I get excited when I look at it.h3 Four Factors/h3
There are 4 key factors on the charts that give confirmation to this theory, all of which indicate that a drop of 25% is in the cards. Let's review them so you can make an informed decision on this trade.
1. There was a bull flag on the daily chart going into Wednesday. This normally signals significant further upside. The stock surged early Wednesday, then gave up 100% of the move to close flat. Technical traders understand this signals a failed breakout. Failed breakouts usually result in a significant sell signal. Coming off all-time highs, this could mean a multi-year high and 20% correction in the next six months.
2. The weekly chart has a 3-bar surge, which usually signals a pull back is on the horizon. However, a weekly three-bar surge, coming at all-time highs, can mean a multi-year high pivot is in place.
3. 3M's monthly chart has seven green candles higher. This means that for seven months, the stock traded up. For hardcore investors, this is significant as it shows a 95% chance of a drop in the stock when matched with all the other signals discussed.
4. Lastly, on the monthly chart, connect the highs from 2003 to 2014-15. If you extend the trend line, it hits the highs on the chart perfectly -- just one more epic sell signal for MMM
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