Saturday, 9 February 2008


Not because the symbol resembles a fad in the 70s that should stay dead but rather of what the price of Discovery Holdings A shares (Nasdaq:DISCA) is currently doing. This company that has involvement in media, has already gone sideways and broken down.

Let's see what the chart tells us. From Oct. 2006 to Aug. 2007, there is a clear uptrend. Then starting from August onwards, it has gone sideways to form what looks like a descending triangle. Based on previous levels, it is safe to presume that there is a support at 22.51. This has already been broken with significant volume. Since prices are already below the moving averages, we already know there's bearishness in DISCA. Add to that, the MACD of the stock has been oscillating below zero since November 2007. This only confirms the bearishness we mentioned earlier.

Should this continue to fall, we see a downside target of 16.22. That's a 28% return! All I have to do here is to short it at the right price and wait for a maximum of around 6 months to reach the downside target, or I get stopped out. Whichever comes first.

So now you know why DISCA sucks. It sucks for those going long on it.

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