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Whatever has kicked off this latest selloff, the stock is now
approaching the critical list. Like CSCO at 50, we may find buyers for AOL at 45
(last trade 45.69). However, with a monthly close at current levels, we will
have put in an outside bar with a down close reversal for the long term out of a
multi-month consolidation. Given the spikes from here on down (on the way up),
one needs to look elsewhere (not the monthly chart) for meaningful
support.
$20 is not out of the question, but at the present chart
structure it is as outlandish as calling $40 on YHOO once YHOO broke
$120.
72% of today's AOL volume thus far = block
volume.
Meantime, a Long Disney Short AOL spread has been rewarding
indeed - though Disney is looking 20% lower from $38.50 once it broke its 200
day on rising volume coming out of a yearly low in volatility.
That in turn would setup the perfect long DIS seasonal trade,
where December-Jan are one of the more bullish months for DIS.
Gitanshu
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