Wednesday, 21 November 2007

Laying a Smackdown on WWE

Finally! Tarantrader has come back to post a new entry!

One of my favorite entertainment companies has long been listed in the US market and is undergoing some rough times, as far as trading is concerned. This is none other than World Wrestling Entertainment (NYSE:WWE).

As we can see in the chart, it has formed a double top after going up for most of 2005. After breaking down from the neckline, WWE has gone sideways to form a symmetrical triangle and it hasn't broken down from there yet.

I know what some of you may be saying. This guy deserves his nickname, why would he even want to trade something as fake as wrestling? Excuse me, first of all, this is sports entertainment. As such, there's a script to be followed. Plus the hazards are real. As real as the stock being hazardous in itself. Also, an opportunity is knocking. Shouldn't I be taking steps to try and answer opportunity's call?

So just how good is this opportunity? Currently, I'm looking at WWE's support at 14.56, giving me a trigger price of 14.27. That translates into almost a 20% return. Not bad for something considered dubious.

Now, if only the volume can be as attractive as the price movement. I fear that should I be daring enough to short WWE, I could be setting myself up for a world of hurt. Worse, WWE could lay a smackdown on my candy @$s if I'm not careful.

Just the same, an opportunity is an opportunity. And as traders, it's a mortal sin for us to just watch and do nothing. So what's a guy to do with WWE? Definitely a short sell is in the works but we just need to be patient.

God will help in our decision for this and it's time to take on Vince McMahon's challenge.

And that's the bottomline, 'cause Tarantrader said so!

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