10/9 Tuesday

Bearish Sentiment #1 – HnS Pattern

-Head and Shoulder is clearly seen and formed. Looks like we have broken our neckline and trading downside.

-My bearish trigger is just below today’s wick and I will probably get triggered unless we gap up tomorrow morning.

-Good spike of volume today. We haven’t seen this kind of bearish volume for about 5 months so it is BIG deal to support this bearish move.

-Do you see all these confluences (supports/pivot) going down?  Its tough tough road downside.

-My bearish trade targets = $64.50 and $62.50

Bearish Sentiment #2 – Bearish Divergence Confirmed

-You remember my recent $AAPL trade? Looks exactly like it!

-These bearish divergence works about 85% of the time. Very very bearish signal and they take in effect almost immediately and they usually give signals of major trend changes.

(Side note: you remember the market crash about 3 years ago on Dow Jones Index?  It was initiated first by bearish divergence and then the whole market crashed.  So yea these divergences are very very powerful.  I mean look at $AAPL now. It tanked after the bearish divergence has been shown)

Bearish Sentiment 3 – Bearish Divergence (Weekly)

-This makes it ever better. We got weekly bearish divergence almost 90% confirmed. We just need the MACD to roll over little more to make this fully confirmed bearish divergence.

-This shows us that $QQQ is ready for longer term trend changes (premature stage).

Bearish Sentiment #4 – 50 EMA Broken

-50EMA has been broken today. It’s been a while since we broken 50 EMA in solid uptrend. So this is huge event that happened. Definitely bears are coming out and attacking hard.

-5/4/12 we broke 50EMA and it tanked to $61 area.

Lots of Confluences Going Down

-We got at least 6 major supports between now and my 2nd target. Tough tough road.

-Also you can see in this chart that bulls have all this momentum working against bears.

*We are seeing some double top formation on all three indexes (Dow Jones, S&P 500, NASDAQ) and showing some bearish sentiments in the market as a whole.  If or when market rolls over or at least start to change its direction to the downside, that would really help this trade out very well.

*Yes we do have tough road with many confluences on the way down but we got pretty strong bearish reversal signals at the top, I am willing to bet that bears are going to win this match.

10/10 Wednesday – Triggered Bearish @ $67.25

-Well well well I got triggered early this morning.  I think $65.30 won’t be a big problem but that gap support at that level is going to slow us down. Also you can see that the gap support is coinciding with that uptrend support from 11/23; that could be a VERY STRONG support when it coincides like that.  It’s strong enough to reverse the whole thing so I am going to be watching that very very closely.

-Also Head and Shoulder formation bearish move likes to come back up and test that right shoulder as new resistance. So I wouldn’t be too surprised if we get back up and test that resistance from the right shoulder.

-Pretty good volume yesterday and today.

-well 38.2% retracement level we are sitting on is bit concerning for me right now.  I could see that we could bounce from there and test that right shoulder support as new resistance and fall back down to 100SMA.

-Again we have so many confluences on the way down, it’s not going to be a easy ride.

10/12 Friday – Head n Shoulder Confirmed

-Both necklines are broken

-Testing 2nd neckline as new resistance.   Yesterday threw a Bearish Engulfing and today with Tombstone Doji. Both are bearish reversal pattern.  I am expecting more bears on Monday.

10/16 Tuesday – Testing the Neckline?

Well $QQQ at times very unpredictable since it follows the NASDAQ.  Looked very bearish but all of sudden it turned around and now testing the neckline.  My stop is just above that neckline resistance so if it does not hold tomorrow, I will be out of my bearish positions.

Volume isn’t bad so that kind of worries me. It’s not great but its ok for it to find some momentum tomorrow.

Look at my previous update, I did expect this to happen but I am little shocked that it happened this fast with huge bullish candle today. I mean after Head and Shoulder break more often than not you will see the testing of the neckline. I mean it always all the time happens. It’s happening on $AAPL right now.  Oooh even $AAPL had very huge bullish candle today and just testing that neckline.

This is very crucial price level because this neckline is going to determine if this stock is going to continue bearish or the whole HnS thing was not going to play out.

Looking at my oscillators. RSI is rested so it can go back down. Stoch however is still at overbought territory which that concerns me. MACD is still bearish and still lots of room to go.

10/18 Thursday – Yes and Failed

Well here you can see that Head and Shoulders was confirmed and then it came back up and test that neckline.  This is very very common and this is what’s happening on $AAPL.  If or when the neckline holds, then true power of Head and Shoulder comes alive.

$65.20 is the next targeted area.  Thats the price level that coincides with the gap support and the uptrend line from 11/28/11.

Look at the volume today. Great spike of the volume. This could really jump start the bearish move to our target.

10/19 Friday – Tanking..

(9:36am CT)

Head and Shoulders pattern is starting form very nicely and confirming everyday.  We had very nice volume yesterday and that might fuel us enough to get to my next target which is $65.40.

This head and shoulders is little peculiar because we had 2 necklines as you can see.  So next week, $QQQ might feel that it needs to check the 2nd neckline as resistance before continuing bearish so watch out for that.  Everything looks good so far. $AAPL is tanking and 3 indices are tanking. $PCLN was also tanking last time I saw.

Looks like we are going to see some bearish days next week.

(11:14am CT)

Closed out all my Puts @ $65.82

(11:28am CT)

Head and shoulders is fully confirmed but I want to first wait and see how it deals with that uptrend support and the gap support.   In the event that we break those two supports, I will probably get back in bearish but for now satisfied with my gains.