VHC ended up generating a very small positive reversal day, having made a new 7-day low but then closing in the green. Unfortunately for the bulls the green close was only by 1 point which does not make it a believable reversal. By the same token, the stock did close in the upper half of the day's trading range and it is likely it will go above today's 6.91 high tomorrow. As stated in the newsletter, if the bulls are unable to get the stock above 7.02 in the first 2 days of the week, I will liquidate the positions. As such, the probabilities are high that I will liquidate the positions tomorrow, likely between 6.91 and 7.01.
P.S.
I somewhat expected the rally today in the indexes, inasmuch as the NAZ, as well as several of the stocks I am short (such as GS and TOL), gapped down on Friday and Friday was not a gap down day as no news to generate the gaps occurred. As such, those gaps were likely to be closed. In addition, the bulls have been so accustomed to buy all dips that it made sense they would try again today after Friday's somewhat unexpected weakness.
Nonetheless, the bulls accomplished nothing today even though they were able to recoup about 95% if Friday's loss. The highs of the day were made by 11:00am and after that the bulls were unable to generate any additional buying.
The gap in the NAZ and in GS and TOL were closed today and it is funny to see that the NAZ rallied up to 5000 (from 4993) in the last 5 minutes of trading, suggesting the traders simply wanted to get the gap closed. The indexes did close in the upper half of the day's trading range and that likely means the bulls will come in tomorrow trying to take the indexes higher and they will probably be successful to the tune of a few points above today's high but then again with the NAZ gap having been closed, it would not be surprising to see the indexes open lower and go down from there. I believe tomorrow will be a negative day and that the volatility and weakness seen on Friday will be seen again tomorrow or if not all of it tomorrow, I do believe a lower low than last week's low will be seen by the end of the week.
My opinion.