Trend ChannelsDeere-Xilinx-Golfport-CoreLogic

Downward Trend Channels for the Market Correction Commentary Tickers in this Article: XLNX, GPOR, DE, CLGX With a correction underway, stocks in downward trend channels present short-term short sale opportunities. The S&P 500 managed to gain a few percentage points off the October 15th low, but the depth of the decline indicates that at least over the short-term the major index isn't likely to see new highs. While the market could rally to new highs, under current conditions odds favor taking short positions. These conditions remains in effect until the S&P 500 makes a higher swing low and a higher swing high. As long as the index is making lower swing highs and lower swing lows short positions are favored.

Deere & Company (DE) Deere & Company (DE) has both a bullish and bearish case. The bullish case is that the price dropped below long-term support between $80 and $79.50 on October 8, then flew higher over the following sessions indicating that the support level is still strong. The recent strength has put the stock right at the top of a multi-month downward trend channel. A sizable bearish engulfing pattern also showed up on October 17. Those are two bearish signals. If the the price can claw back up to a level between $84.20 and $84.80, going short may capitalize on the possibility of the downward trend channel continuing. A stop can be placed just above the recent high of $86.09, with a downside target at $79.50. If the price rallies above the stop, given the strong bounce off long-term support, the bullish case for the stock would gain credibility. SEE: Profiting In Bear And Bull Markets

Xilinx, Inc. (XLNX) Xilinx, Inc. (XLNX) has had some significant downward price gaps as it.has fallen off its March $55.59 high. The most recent gap though, on October 17, was higher. That gap higher pushed the price to an intraday high of $42.69, very close to the downward trendline going back to March. The long upper shadow on the October 17 candle indicates there wasn't a lot of buying interest above $41.75. A shorting opportunity occurs on rallies above $41.50, with a stop just above $42.69. A dop below $40.40 also presents a shorting opportunity, as this will break the daily low of October 17 and the price could fill the price gap. Initial target is $38.80, with an additional target at $37 just above the recent swing low.

Gulfport Energy Corp. (GPOR) Gulfport Energy Corp. (GPOR), after rallying aggressively off a $40.12 low on October 15, is heading toward the top of a trend channel between $53 and $55. The stock is still a ways away from this region, closing on October 17 at $47.19, so whether the stock will even reach this sell zone is unknown. If the price moves into this area, watch for a consolidation (when the price moves sideways in a tight range), at least four days in length, then short if the price drops below the low of the four day (or longer) consolidation. A stop loss goes just above the consolidation high, with a target at $44.

CoreLogic, Inc. (CLGX) CoreLogic, Inc. (CLGX) also has a bullish and bearish case. On the bearish side the stock is in an overall downtrend and very close to downward trendline resistance going back to January. Bears can watch for a multi-day consolidation in the $27.50 to $28 region. If the price breaks below the consolidation, enter short with a stop above the consolidation and target of $26. This brings us to the bullish case. The descent of this stock has been slowing since May. This decreases the probable profit potential on the short (if it works) and increases the chance of the price breaking through the long-term downward trendline and proceeding higher. At this point the trend is still down though.