10/24 Wednesday
Entered bearish at $70.42
It took little bit longer than usual to form this Head and Shoulders pattern(normally 2-3 months) but it is a HnS and the neckline was just broken today. I’ve placed my bearish trigger last night just below that neckline and got triggered today around 1pm CT.
We got some good increasing volume last three days which really helps this move.
Targets:
- $67.50 (Major pivot area – take a look at my chart. It’s been touched multiple times and when it does touch, it shifts)
- $64.50 (Gap support)
- $60.00 (Ultimate target)
This is completely amazing. I didn’t even see this last night or I probably have but didn’t pay attention until now.
10/20/50EMAs are all crossing and this tells me that we have tremendous bearish momentum is coming and bulls are really losing this battle. To confirm this move, we will need all of them completely crossed each other next few days.
200SMA was already broken and now just kind of breaking 100SMA.
Many people don’t realize but these fund managers and the big boys, they trade off of these long term moving averages. So when the stock trades below the long term moving averages, the major players will come in and short the stock. Conversely if they trade above 100SMA/200SMA, they will buy some shares.
So this is good for the bears as it starts to tank, we should see some major selling pressure come in.
10/25 Thursday
(11:15am CT)
(Stoch, RSI, MACD)
Here are one more resource that we can add to our bearish argument.
We have Bearish Divergences confirmed on all three oscillators.
Take a look at MACD. We really have steep angle on that thing indicating the seriousness of this bearish divergence.
10/31 Wednesday
Nothing huge today but looks like we are starting to really form this Head and Shoulders pattern.We got pretty decent volume spike which is plus.
My initial target is still at $65 area and $67 support to watch out.
I always watch out because many times when HnS pattern is formed, it will start to go lower but many times stock likes to come back up and test the neckline (which is $71 area in this case) before traveling further downside. I probably will hold it through if the neckline testing comes and probably add more position when it starts to roll over after testing the neckline. But if it doesn’t test the neckline, better for me. =)
11/2 Friday
(8:45am CT) Added More Positions @ $70.33
Test the neckline of this Head and Shoulders pattern and it seems as though it has been holding well so far.
Got in with more Put Options earlier today because this neckline testing happens very often after HnS is confirmed. Expecting more bearishness from here.
(11:45am CT)
(After Close)
11/3 Saturday
Updated Target $62.80
Gap filling action of $68.77 ended yesterday with strong looking bearish candle there.
My ultimate target on this trade is $62.80 precisely (next gap to fill) which I think we can get there within few week or maybe less. Steady volume has been coming in but I would like to see some higher spikes on the way down.
This updated target has been measured looking at the top of the head (0% = $78.44), down to the neckline area (100% = $70.62) then we measure 100% down from the neckline which is our measured possible target (200% = $62.80).
We did fill the gap of $68.77 last Friday but we are still sitting on that gap support so that might slow us down next week but I think it’s going to break very quickly as bears are really taking over this thing.
Let’s look at the Moving Averages.
What is this all mean?
It means bears are accumulating momentum and really taking control of this move. Traders use the term “death cross” when moving averages collide and crosses. Currently we got all sorts of MAs crossing.
Also you can see that $SLB is now trading below ALL moving averages which signifies very bearish trade to come next few weeks.
11/4 Sunday
Weekly Uptrend Support At Around $62
Just browsing through my position and found this weekly uptrend support which coincides perfectly with our target so definitely the target at around $62 is a good spot. For sure though that price level will be tough to beat which I don’t intend on holding through it.
11/6 Tuesday
(Early Morning) Another Testing of the Neckline
(200SMA (red), 100SMA (blue))
Looks like another event of neckline testing here. Am I still bearish? Yes. Head and shoulders pattern is fully confirmed and $SLB is wanting to test the neckline one more time. As you can see that 100SMA is acting as current resistance and 200SMA just above. As long as the neckline is not breached, I am very bearish on this stock.
$63 is still my bearish target.
(BBands, DMI, ADX)
You can see that as the stock traveled lower ADX (Strength Indicator) really liked the move thus pointing up but as soon as $SLB starting to travel higher, ADX is not liking the move by pointing down. ADX is currently at around 18 level which suggests losing of the momentum so what we need to see next few days is that ADX traveling above 20 line and continue traveling higher thus suggesting the bears are continue to control this move.
Overall today’s price action isn’t much but a neckline testing and I will check again before close today and I might even add more positions later.
(After Close)
Ok now I got to start worrying about this head and shoulders pattern bearish trade. Bears are not out of the game yet but they are just in the edge. Last two days bulls raging they came back up and tested the neckline once again. Bulls were not able to break the neckline today but they are just at the door.
Looks like the gap support provided some fuel for the bulls and today they certainly showed that they are not going to withdraw easily. Also solid volume came back up today and definitely there is some strength in this recent bullish move. Not a bubble for sure.
Let’s look at our moving averages.
Here you can see that 200SMA has been a solid solid resistance for about 4 months now. Practically drew a neckline for us. If this gets broken tomorrow, I would say bears are done and I am done in this bearish trade until further signals.
However,here’s one thing I want you to take a look at.
You can see that 200SMA and 20EMA is traveling together. They are completely in sync to each other that I can’t even really see 20EMA on this chart. This is actually very good sign for bears. This provides stronger resistance when two moving averages acting as resistance like that. We’ve all head of “death cross” right? It’s works similar way where they are now both traveling and this is where they are about to cross each other. So you can say that we are in the beginning stage of this death cross. We don’t have any confirmation of that yet but definitely this is a good sign for bears that those two MAs will become a solid gate keepers for us tomorrow.
For bears, this is what I like to see.
Tomorrow no big moves from either side. I would like it to close with a spinning top or a doji with low volume and then Thursday, I would expect bears starting to coming in. And if or when the neckline holds true, BEARS will come back stronger than ever.
But if tomorrow, Bulls rush in and break the whole thing, I will get stopped out here pretty quickly.
11/7 Wednesday
We Got Ourselves A Spinning Top
Why the Spinning Top? Why is this so important? If you’ve read my yesterday’s update, I wanted to close today with a spinning top or doji with low volume. But we got SOOOOOO much more than that!
First let me say that we gaped down after 2 HUGE bullish days. This is very significant since we are running into the neckline. That information alone tells me that the neckline is standing STRONG.
Second, we closed today with a spinning top. Very insignificant candle many would say but remember in candles, location is everything. So for the fact that this candle appears below the neckline after a huge two days of bullish run, tells me that bulls are really losing strength and bears are starting to control this thing once again (we don’t know that yet until tomorrow’s price action but it looks to be that way).
Lastly, I was only looking for a low volume today but instead we got high selling pressure volume which this could really fuel bears to come back strong tomorrow.
11/8 Thursday
TANKED
$67 next support, $63 next target. Today’s volume will provide good fuel for tomorrow and next week.
11/13 Tuesday
(8:45am CT) Closed Out My Positions @ $67.89
13 thoughts on “$SLB – Head and Shoulders Confirmed / Bearish Trade In Place (Update 11/13)”
Bro this is some good stuff u putting out. That’s one clean looking HnS pattern with neckline broken. Though it will likely drop n comeback up to retest that neckline. That will b another opportunity to get in this bearish trade. 67 target is an almost sure reach.
yea with last 4 days of bearishness, its gonna wanna rest and pull back a little for sure
This stock an epic find dude! Have learned so much off of you the last few weeks…amazing! I didn’t get in today because I wanted to go over a few things tonight, but this stock really doesn’t have anywhere to go but down (to at least the pivot point you mentioned). Did you buy puts for Nov or Dec expiration?
hey Ishan, thnx for your kind words, I really appreciate that. And also I am glad that my analysis can be some help to your trading =) Yes I bought December puts. I always buy more time than I need just in case.
Do you think we get that spinning top or a doji with low volume ?
@daytrader305 hmm not sure yet… gap down was definitely a good thing but bulls are holding well.. looking at the candle today, still some bullish sentiment hanging around.
@daytrader305 if bears come back last min and push down the body.. then we can have a spinning top.. that would look great for tomorrow for bears
In your tweet, you say “Taking half of my positions here..” I assume you are covering half of your short? When H&S is confirmed, is there a reason you are selling your puts?
@dustycohen yea i covered half of my positions. Because I bought more puts three days ago when it came up to test the neckline and I was heaviliy loaded. If you look at my chart, $67 has been a solid support in the past so I wanted to grab some off the table. But I still think we are going to get to $63 level
@2kaykim I have a starter position (Dec puts) and would like to add. At what price do you think I can re-enter (and at what strike/expiration)?
@dustycohen u shouldn’t add any at this point. Best time to add was the neckline testing 2 days ago. But if you really want to add, if we bounce from $67 tomorow but I still dun think that’s a good idea. Best to ride it down to $63
Hi @2kaykim what software are you using to drow your graphs?
@Ittahr i use tdameritrade strategydesk