FAS Breakdown

May 12, 2009: Price dropped below the top of the pennant used as the breakout pattern. This illustrates the need of stop-loss protection. In this case, the pattern top was at 10.05, so a stop-loss sell order just below 10 would be right. The idea is to get nibbled but not taken to the cleaners.

Price decayed to the 20-day moving average centering the Bollinger bands, then recovered to the trendline pattern bottom, as if to retest it. The retest complete, stochastics indicate today's drop is not the bottom, and tomorrow will carry lower.

May 13, 2009: Price gapped down at open and continued down, closing at the 62% Fibonnaci level of the 5.60-13.27 movement. Stochastics again indicates this is not the finish of the drop. It seems enroute to the 50-day moving average currently at 7.07.

Market averages show similar patterns as they react away from their 200-day moving averages. They will probably drop down to retest their 50-day moving averages. The NASDAQ Composite's Point & Figure chart indicates a target coinciding with the 50-day moving average.

A correction of the tremendous runup since early March is due. A 38% Fibonacci retracement of the S&P500 calculates as 830.
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On reflection, one might have done better than a small loss. For example, a pennant breakout averages a run up of 25%, which calculates as (10.05 * 1.25)= 12.56. The ultimate high was 13.27. Also, I've drawn a line across the last three peaks, indicting one could expect a reversal at that level. That also was the third wave up, so an Elliott-wave analysis could expect a correction starting. That speculation taken forward means we are into the A leg of an ABC correction.

With an average volume approaching 300M shares per day, FAS is obviously traders against traders. Overlooking things such as those of the previous paragraph are obviously paid lessons one should at least get one's tuition's worth from. If one doesn't, expect the lesson to be repeated at full tuition.