Staples (SPLS) was in a nice daily uptrend in 2013 but had an igniting gap down on 08/21/2013 that snapped that uptrend. It took three months for SPLS to rally back up into $16.66 to fill the gap down. The gap down area created a supply area that SPLS was sold into and never made it back to its pre gap highs at $17.26. SPLS has become one of the weakest stocks in the Nasdaq 100 in 2014 moving from $15.00 to $13.00.
GAP REVIEW
On March 6, 2014, SPLS gapped down on earnings snapping the $12.70 pivot of support. The gap down day on SPLS was sold into the entire day with over 69 million shares traded. This type of volume displays institutions leaving the equity.
KEY LEVEL
Overhead supply exists at $12.00 the gap day high. The rallies on SPLS have only made Lower Highs on the daily and making Lower Lows.
THE TRADE
Short any bounce up into $12.00 overhead supply or a break of the lows at $10.99. Target would be into $7.00. Stop would be over $12.05.
Disclosure: My Swing Newsletter Subscribers are also pursuing a short at $10.99
