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
