Playing a Breakdown in Construction ETF

On April 23rd, I talked about taking a dive into China Unicom CHU via the May $13 calls at $0.85. This morning the stock is pushing higher trading around $14.20 making it a good time to grab profits here and let go of those calls around $1.25. The stock is a bit extended despite a strong move in price. Unfortunately, this has been the point in the past where CHU stalls.

Speaking of breakdowns, the move lower on the iShares Dow Jones U.S. Home Construction ETF (ITB) is troublesome. I haven't tossed out many put plays as few have worked for me as of late, but this appears headed to $35. We lost the support level at $38. Because of this, the consolidation over the past three months now appears as a bear flag. While I'd prefer to wait for a weekly close to confirm, the secondary indicators in terms of momentum and trend are both bearish. The little bounce attempts make with the StochRSI and Full Stochastics are stalling....112 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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