RHT, RedHat update

RHT dec 14 2014 1RHT dec 14 2014 2

Redhat is the company most involved with the “open source” Linux operating system. Back in 2012,at about $62, we thought it was a sell. It was initially but it came right back and made a marginal new high (for this run, once it was at about $140), so you would have simple wasted two, almost three years time. Now we have a fairly clear pattern, a diagonal or in plain English a wedge. They come at the end of the ride and we think this is the end. But before you get too carried away we would like to point out that these wedges are masters at deception and sometimes they run for longer than you would expect, as in the chart on the right. We do not expect that at all this time but just want you to be warned. The beauty of all this is that, either way, this stock should not trade above $65 and should, again in both cases, trade below or at $42. This is a very high confidence situation so your risk/reward ratio can be much lower. Choose the spot that fits your style best. If you do not have a style then just sell short at $60 or above, get out of any longs now and very definitely if the stock breaks the lower boundary line.

55 June 2015 put options are trading at $4 offered and , for some, this might be the best strategy.