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Stocks This Week: Sell Short Alexion Pharmaceuticals And Mattel

There are three important points to keep in mind. First, sentiment has become far too bullish. Traders became more bullish as the market pulled back. And, as of Thursday night, the AAII poll of investors reveals a sharp increase in bullishness in the last week. The purpose of a market decline is to turn the majority bearish. If bullishness increases during a decline, then lower prices are likely.

Second, the daily S&P index appears to be an incomplete A-B-C pattern. The C wave is the strongest and it appears to have begun.

Third, post-OPEX week in September is the weakest of all such option expiration weeks. The 16th-25th has been the weakest part of this month and one of the weakest periods in any year. It has been down in 2 of 3 cases since 1980. The S&P trend appears to remain down into the 25th.

Post-OPEX Week in September

Blue: Average Percentage Change

Red: Probability of a rise on that day

Green: Expected Return (Product of the first 2)

Here are two more short sale stock recommendations for the short term.

Regarding Alexion, both the weekly and the daily dynamic cycles point down. This stock is a NASDAQ NDAQ component, the index that is likely to take the brunt of the selling in the coming week. All four sell signals have been profitable in the last year. The weekly cycle tops on the 18th and bottoms in November. The $104-$105 area is a likely objective over the near term.

Chart 1

Chart 2

Chart 3 shows that the daily Mattel MAT cycle tops now and bottoms in October. Six of seven sell signals have been profitable in the last year. The weekly cycle is falling and the monthly cycle hits a peak on October 10th. September has been one of the weaker months for the share price, especially late in the month. From September 16th in any year to October 10th, the shares have fallen 70% of the time. This cycle combination is likely to send the shares closer to the $10.5 area.    

Chart 3

Chart 4

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