Politically-Correct Short Sale
Lorillard (LO) is a cigarette manufacturer that stalled in October near 82.50, after a strong recovery. It ground out a 3-month double top pattern and sold off last week, breaking the 200-day moving average. A short sale could profit from a downtrend into the mid 60s.
Last Thursday’s gap was triggered by the ex-div date. The stock followed through to the downside on Friday, which is bearish. It also means there’s no dividend for short sellers to worry about in the next three months. Close up price action shows a declining channel. The stock could pop as high as the mid point of that pattern, around 75. This corresponds with the bottom of the gap.
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