A Study in Short Selling - Jaguar Mines (JAG)

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When I drew this trend line on Jaguar Mines (JAG) this morning I never in my wildest dreams thought that today the price would drop to that line.

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I cannot find any bad news to account for this incredible drop.  So let's think about how this may have been the perfect setup for some deep pocketed short sellers.

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First there is the higher high in price that yielded a lower high on the True Strength Index (TSI).  Then on very heavy volume, JAG made an even higher high, not by much, which totally exhausted all the buying pressure. The TSI was reading 68, then 47, then 22.   In effect, someone with a lot of shares sold to everyone at the top, then turned right around and shorted their purchase, apparently without mercy.

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Honestly, I had never thought about this TSI setup in terms of short selling, but I will in the future!

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Click on the chart to ENLARGE