9/26 Wednesday – Massive Bearish Divergence
Wow. I mean this is just MASSIVE. Massive bearish divergence for about 3 months!! Amazing…
With divergence this big, I am looking at long term bearish trade. You know what the most significant thing about this divergence? It happened at the peak of it’s move on $ORCL.
Let’s look at my charts for some trade setup.
-Entered Bearish at around $31
So I placed my bearish trigger last night and I got triggered this morning. We gaped down this morning which I suspect that it might be a break-away gap. As long as it does not get filled, it is confirmed as break-away gap to support this bearish move.
Currently my stop is little tight knowing that I am looking for longer term bearish trade but it is what it is for now. Depending on how it moves this week, I might move my stop.
Two targets
1. $29.60
2. $26
It’s going to take about 1-2 months IMO for 2nd taret but $ORCL falls much much faster than it moves up.
I want you to look at something here.
That purple line is 50EMA. As you can see, we haven’t touched 50EMA for about 4 months. And today we broke that 50EMA. This suggest that longer-term bearish attack is starting to appear and bulls are starting to lose the battle.
100/200SMA is going to be our next target.
What was our first target? $29.60 right? Look at where 100/200SMAs are hanging out? $29. This solidifies the pivot area at our first target. Whenever your charts confirms each other, it has that much value.
Well I am in this thing for a long-haul so I will have fun updating it.
$29 is going to very important price point. This thing could just tank all the way down to our Target 2 but I do think we are going to for sure slow down at around $29 are but also could bounce and jump back up to $32 area. I obviously not going to hold my bearish position when it does jump. I will get out of my bearish position with some early reversal signals.
And wait until it falls back from $32 area and ride it back down to $26 area if or when it decides to bounce from $29 area when we get there. LOL I know I am thinking way way ahead of myself but plan is always important in your trading. Always have game plan and trade with your game plan, NOT your emotions.
Take your fear and greed out of your equation and trade it with PURE technical analysis. That’s what I do =)
10/1 Monday
-Added More Bearish Positions at $31.98
Well good sign that the pivot line I drawn is a good pivot area as we got Doji at pivot/resistance today at around $31.
I added more bearish positions today (Dec. puts) and moved up my stop. I am convinced that this thing is ready to head south but it won’t be an easy ride.
$ORCL is very choppy stock (it doesn’t move smoothly to one direction but kind of zigzags as it moves) so got to make sure that my stop is placed accordingly.
We might be forming a really awkward looking head and shoulder pattern but nothing confirmed.
$26 is my ultimate target!
10/2 Tuesday
Well looking at it in the big picture, definitely we established good RESISTANCE up top there. Currently (possibly) forming a weird looking Head and Shoulder pattern but not confirmed.
Around $26 is my target and this one is very choppy. To ride all the way down to $26 is going to require tremendous patience on my part and make sure to put the stop where the stock can freely move around.
My stop is still the same place where I placed it and I might be thinking about putting my stop to above $31.50 pivot area but need to wait until it tanks little more.
10/5 Friday – Head and Shoulder Forming?
-Ok this could be ABSOLUTELY AWESOME if this thing confirms because up top we have a MASSIVE BEARISH DIVERGENCE and to add to that, we are forming a Head and Shoulder reversal pattern.
-You can see on the left there that we had this awkward looking head and shoulder which played as so. And that drop was about $4 drop. And possibly here we might looking at $4 drop. I do think this time it’s strong because of the bearish divergence in the picture.
-Top of the right shoulder resistance, we have a Bearish Engulfing pattern. This is one of stronger reversal pattern especially when it occurres at a pivot area and that’s exactly where it happened. Very very strong reversals signals happening at the top right now. Also we had some good bearish volume spike which also confirms the analysis.
10/9 Tuesday (9:50am CT) – Neck line..
-Critical price point here. If we can close $30.40 here today, it would look very nice this coming week.
-HnS pattern almost confirmed. Probably 2-3 more days of trading and see that the neckline is completely broken.
-$28.80 next target
10/12 Friday – Bear Flag Continuation
-I love this pattern because I know what’s coming. You can see that last three days we’ve had some correction move.
Three days ago a doji and then another long-legged doji yesterday and today we had pretty bullish day. But despite of the short bullish move we’ve had, the volume has been declining. Can you see that in the bottom?
That’s a Bearish Continuation pattern which is called Bear Flag. Stock rose but volume declined. I mean we had pretty fairly good looking bullish candle today (compare to last two) and we should had some spike of volume but we did not.
Also you can see that we are testing the neckline resistance of $31. $ORCL moves up and down a lot so these intra-day movement isn’t going to faze me. I got my stop set pretty loosely knowing that fact.
-I won’t be surprised if the bears rush in on Monday.
10/16 Tuesday – I lied Not a Bear Flag..
Well well well. Turned out that wasn’t a bear flag. Looks like we have a Three White Soldiers marching into the next resistance area of $32.09 which my bearish trade stop is just above that level.
Well $ORCL is very CHOPPY stock. If you look at the past chart, they are all over the place that’s why I have my stop pretty loosely on this because I want it to move around freely.
Today with Three White Soldiers appearing I feel little bit more comfortable because after three white solider or three black crows rest is imminent. Plus we are approaching the resistance.
Also it appears to be forming a broader right shoulder to match the left shoulder? Definitely the Head and Shoulder pattern has NOT been confirmed. I guess we can say that $30.48 could be a solid neckline and if we can close below that area possibly HnS is confirmed.
Well let’s see if the resistance is going to hold tomorrow otherwise I will be out of this trade with a loss.
10/18 Thursday – I am Still Alive
So I never got stopped out and it looks like we are changing direction back to bearish movement however we got a dragonfly doji at our neckline. Dragonfly Doji gives just slight hint of bullishness so it will be interesting to see what we got going on tomorrow.
Technical we are still forming this very ugly and peculiar looking HnS pattern. If we close below $30.60 area, we can confirm that this HnS is legit. Until then, can’t say that we are gong to tank.
Bearish volumes are back which is a great sign for bears.
As far as the duration is concerned (duration of making the HnS) we are now passing 3 months. This is a textbook duration for HnS so if this is confirmed, I think we are going to see some sharp decline on this stock.
10/20 Saturday – Adding More Puts on Monday If..
So I’ve been in this bearish trade since 9/26. Yes It’s been a while. Almost one month. It was lot of up and down swings forming this wide right shoulder of head and shoulders pattern. We did have a huge bearish day on Friday and helped my current positions very well. Yes I am still in it and have not yet closed it out yet but I am actually planning to get in more on Monday.
Why? Because we have Bearish Divergences in the picture and the Head and Shoulders pattern forming on top of that.
Last Friday, it appears to be though the right shoulder neckline has been broken however we have 100SMA just waiting below to catch the drip. So I am not totally comfortable to say that HnS is confirmed.
I will feel so much more comfortable once that 100SMA has been broken. Yes 200SMA is coming right up after that however after 100SMA has been broken, the bearish momentum will be such a way that we could plow through 200SMA well.
So here is my plan for Monday. If it starts to trade below the 100SMA on Monday with strong bearish move, I will get in with more Put options to add to my current positions.
All three indices are at a major support which means we might bounce and the whole market could have a bullish day and that could mean bad for me if the market starts to turn around after I’ve been triggered. So I would have to watch the market close on Monday and see the sentiment of how it’s going to play out.
Head and Shoulders Forecast Target: $28.20
Of course this ETF is not going to just go straight down but probably zig zag it down but you got the idea. Head to the Neckline (100%) and from the Neckline to another 100% which is at around $28.20.
It’s funny how these things work because that target area is where we have line up with that gap support from 6/28/12. So the task is to fill that gap. Time frame? Maybe a month or less.
10/24 Wednesday – Nice Volume Activities
(12:44pm CT update)
Here you can see that when $ORCL was forming a left shoulder, it had lower volume activities compare to the right shoulder volume activities. This is how you can kind of see if the right shoulder is going to be broken.
After it started to roll over at the top, we started having increasing volume activities while forming a right shoulder. This analysis adds to my bearish argument that selling pressure is starting to really roll in as we can see that bearish volume spikes are flaring.
However the neckline must be broken before we continue bearish.
10/25 Thursday
(9:57am CT)
Well I almost got stopped out this morning as you can see that my stop wast just few cents away from that upper wick today.
I am seeing many stocks in my portfolio gaped up today. Head fake? Bull trap? Not sure but strange.
$ORCL is taking awful long time to build that right shoulder. We need this thing to tank already! =)
I also have another set of trigger in place to add more puts when it starts to break that neckline and Head and Shoulders is playing out.
Around $28 is still my target.
10/28 Sunday
Looks like short-term bullish momentum is building here after finding some support at $30.60 level.
My current stop is just above that downtrend resistance and I will be adding more Puts if it trades below that $30.25 level.
My target is still at $28.20 and Head and Shoulders still NOT confirmed. We need to break $30.60 level
10/31 Wednesday – Resistance Holding
(10:05am CT)
Probably back down to $30.50 area again. We will need some good volume spike to break through that resistance of $30.50 level. Now we are losing possible HnS pattern and possibly forming a downtrend channel but not yet confirmed.
HnS pattern still valid if we can push through the support this week or early next week.
11/2 Friday – Got Stopped Out At Open
Will re-enter once it breaks that support of $30.40
12 thoughts on “$ORCL – My Bearish Trade Since 9/26/12 (Update 11/2)”
Nicely done!!! I think we gonna get a bounce this week from the 100sma before plowing through the neckline area. If we don’t get a bounce on Monday it could be ugly but it seem like most of the index sitting at major support so i think we might get a bounce before we make through that 100sma. I might get into this position with you if we do we a bounce it will give me a better entry. Seeing lot of lower high is being made. As long as we keep making lower high and lower low it will be a nice trade. What Dec strike do you have.
thanks bro. I have strike $34 currently but if I add more puts on Monday or this week, I will go with strike $32. yea bro u r right. the 2nd right shoulder couldn’t even make it to the recent highs, that gives me more bearishness to it.. If neckline is broken, this thing is ready to TANK
Hey i notice u normally purchase DITM strike is there a good reason for that other than being extremely safe and less violatile. If you know the direction wouldn’t be better to buy OTM strike n give it more on the time thus larger return?
Well yes larger return is good however when it turns against you, you will be burned. I like getting my profits consistently and when it goes against me, I want as little damage as possible so I get ITM strikes. Plus I swing-position trade most my trades so the gains accumulate overtime and as I tighten the stop, I dont lose all my gains when stock turns around… If you are doing quick 2-3 days trading and you know its going to TANK, than I would do more of OTM strikes. currently my $CME BBands squeeze set up, I have it OTM strike because if i get triggered, I am going to be out in a day or two. but if I am going to be holding more than two weeks to a month, i gotta make sure im ITM…
I c. I never really buy DITM. I always buy it at the money or 1 or 2 strike out. Maybe that’s why I have a problem holding onto a position for more than a wk to allow the move to happen overtime. Sometimes i know the trade will happen but being OTM cause my fear to run high bc of the account volatility movement on the P/L. Gotta really shift my sentiment to swing trading. Actually u sleep better buy DITM strike LOL. Where did u learn all your technical analysis from? I have the same technical analysis trading approach like u. Just need to shift it more toward longer term a bit and sit in the trade longer.
Yea if you wanna truly swing trade, you must buy DITM. I would say around .7 delta to .6 delta but look at your stops and see where you are putting yout stops. Your stop must be ITM to be safe. To able to swing trade you must plan it before getting into trade and stick with it… I initially learned my technical analysis thru TradeSmart U 5 years ago.. but i continue to lose money so I had to find the best way to work in my style of trading. After long years of intensive studying and back trading, I found a system that works for me.
How many yrs does it take u to start making consistently making $$$. I have been trading for about 1yr 8 months. The first 1yr n 8 months was horrendous loss a lot of money. It just barely click for me since August. Though I recovered all my loss for the first 8 months n move to positive this yr but I haven’t found that consistency. I made fast $$ n lose fast $$ but I rather make less and consistency profiting. I really have to look into DITM and study with more back trading.
yea it could take years. if youve been trading 1 yr and 8 months, you still lack of the market conditions. It takes years to understand how the market moves.. anyone can find chart patterns, candle stick pattern and trends but it takes years to build that instinct to see where the market is going as a whole and apply that into individual stocks.. also individual stock has it’s own personality so putting all that together with chart patterns, candle sticks and trends, it takes years to master that. I would say back trade more and only get into trades that are super safe setups for now..
The weekly got my attention. It could be forming a nice bear flag. You never know.
@sdmstrtrader hmm good find bro. yea I see that on weekly with declining volume. I am gonna keep my eye on it.
ORCL is beginning to move south.
@sdmstrtrader ooh u r right. its right at the support. needs to break that support tomorrow!