The ARIA Bulls weren't able to hold the upside breakout of the possible Bearish Wolfe Wave. The stock CLOSED back inside the pattern. That's a failed breakout, as it stands, so there's justification for The Bears to come in and short it, but they need to be mindful that there also was justification for shorting the Bearish Engulfing pattern, at Red #3, and that trade didn't work out. There's no problem with putting a short trade on in these situations; just be sure to cover the short if the market tells us that we've got it wrong.
Some technicians would say that yesterday's close is a CONFIRMED failed breakout. I don't consider anything to be confirmed until I've got some money jangling around in my jeanies. LOL. If ARIA goes down and breaks the bottom of the pattern (Red Trendline #2-#4) then gets anywhere near the target line (Red #6), then yes, it's a confirmed "Game, Set and Match" to The Bears on this particular pattern resolution.
The top of the pattern, Red Trendline #1-#3, comes in today, February 8, at 15.92. Should ARIA rally to there, within a penny or three, in the coming days, then falter, that would be additional information that at least a short-term top could be in. The slope of that trendline is +0.07250, so add that amount to today's 15.92 each session hereafter. It will be at 15.9925 on Thursday, February 9, etc.
It's helpful to look at intraday charts for clues about what's going on. For example, when The Bears shorted the Bearish Engulfing pattern, at Red #3...
...they knocked the stock down to roughly 15.37, establishing a neckline for a possible H&S Top. That looked very good for them and if they could have broken the neckline after a rally into a Right Shoulder, that would have put about a dollar of downside IN PLAY (that amount is the height of the putative H&S).
That isn't what happened. The red arrow "should have been" The Right Shoulder high, but The Bulls took that out to the upside, then more importantly, took out the 15.34 high of the Head (white down arrow) to the upside as well. Uh-oh...
That "shouldn't" happen. The Bulls got stronger, not weaker, and after they finally used the high of The Head as support (white up arrow), look out above! The short squeeze was on. The Bears had to Buy To Cover their mistake, at the breakout above the 15.34 high of The Head, and if they didn't, they got dragged almost to 16.00, and through the upside breakout of the Wolfe Wave in the daily chart.
The upside takeout of this H&S pattern in this hourly chart put about 16.34 IN PLAY because the height of the pattern is about a dollar and it broke out above 15.34. The chances of The Bulls getting to the 16.34 target, however, are somewhat diminished by the fact that The Bears CLOSED the stock back inside the Wolfe Wave pattern in the daily chart, but as we know, this stock has done some serious squeezing of The Bears in the past year.
Just laying out what I'm seeing here and trying to follow the action to see if I like something well enough to play it. Wolfe Waves "should" move rather quickly to the Wave #6 target, or thereabouts, after a Wave 5 Fakeout/Breakout, the latter of which certainly is a possibility given yesterday's close. The daily chart also looks stretched enough on the upside. It's been nearly a straight up affair off the 10.41 low, at Blue #4. A move down to/near the Wave #6 target line would be an entirely reasonable correction in the stock.
If anyone is interested in how this plays out and if I forget to post on it (I sometimes get interested in other stocks and don't follow it), remind me in the comment section sometime down the road ;)
1 comment:
There is no problem with putting a short trade on in these situations.
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