From Yesterday morning:
"The break of the Rising Channel/Bear Flag will put roughly 215.50 IN PLAY.
The break of the H&S Top will put roughly 195.00 IN PLAY."
As we've seen many times, these "nested" patterns (patterns within patterns) can pack some punch on a breakout or a breakdown, and this one resulted in quite a smackdown for the SKF: a single day loss of over 25%.
The 215.50 and 195.00 targets got MADE with no problem, and the SKF continued much lower into the close of 181.42. Well, okay, there was a slight problem. I didn't make a dime on it! LOL. There was no pullback to the broken neckline to enter short. Just a dead drop. That's fine. There are plenty of those that do pull back for a retest of the breakdown, and it usually is a nice short entry, as we saw in the DOUBLE failure at the Bear Flag retest in Morgan Staney (see chart below)
Don't let anyone tell you that these 2X and 3X ETFs can't be charted. There are patterns that emerge from time to time that are just as valid as those in any other chart. Both the Bullish Inverse H&S target of 81.94 and the Bearish H&S Top target of 66.50 got MADE.
The FAZ was thrown for a 38% loss yesterday, going beyond the 66.50 target IN PLAY. It broke 86.12-85.41 horizonal support shortly after the open, then knocked out horizontal support (the red lines) on the way down. It momentarily bounced off the 63.79-62.90 gap fill (yellow horizontal lines), but that didn't hold either, so it's still in freefall to the downside. These 3X ETFs are wild and wooly. A bounce could come from anywhere, but the unfilled gap (horizontal green lines) from 56.46-54.15 looks like a reasonable possibility on any further strength in the financials.
From Monday afternoon:
"The Bear Flag target of 16.17 got MADE at 3:47PM this afternoon."
TWO examples in this chart of why so often I say, "Take profits, or at least some profits, when targets get MADE."
After the first Bear Flag target of 19.28 got MADE, Morgan rallied almost to 23.00 for a gap fill failure, and then a failure at the lower trendline of the Bear Flag the following session. Anyone who shorted the Bear Flag breakdown of February 17 still was okay, but it isn't any fun to have a trade come back in your face like that.
Anyone who took profits, or some profits, when the 19.28 target got MADE had TWO chances to re-enter short at the DOUBLE failure in the high $22's.
The second example of "taking profits when targets get MADE" is when the final Bear Flag target of 16.17 got MADE near the close on Monday afternoon. Morgan went only five cents lower, to 16.12, then staged a HUGE rally of almost 30% into yesterday's close. That's pretty miserable for anyone who shorted the February 17 breakdown, and who didn't take any profits. They're roughly at a break even rather than having a nice gain booked :(
Goldman and Morgan continue to be two stocks that refuse to die. LOL.
From March 6 on AZO:
"I thought that I'd be stopped out on a takeout of the high of the March 3 candle, but AZO finally started to come down. Slow-wly. In that situation, my goal is to get out of the trade at a breakeven, or near break even. I don't like to be short a stock that is showing that kind of strength, especially in a general market smackdown.
I abandoned my AZO short for a $35.00 gain." (Real-time executions posted)
AZO closed yesterday at a new high for the move, so that paltry $35.00 gain is looking quite alright. I would have been stopped out for a $2,000 loss.
I still like the premise behind shorting AZO the day after the earnings Bearish Doji Star candle, which was on very heavy volume. We've seen many of these Bearish Wolfe Wave patterns that DO reverse to the downside after a Wave 5 Fakeout/Breakout. But, when this one RALLIED while the rest of the market was getting whacked down to SPX 666, that clearly told me that it wasn't reversing to the downside on market weakness, and that AZO very like would show strength on any market rally because the chart is bullish, and AZO was holding its ground above the Wolfe Wave pattern.
I would consider AZO again as a short if Friday's low gets taken down. Meanwhile, as the chart stands at a new high, this is a candidate for a short squeeze.
6 comments:
I like your blog but I think shorting AZO is simple idiotism. I would never short a stock with uptrending chart above the uptrending moving averages which is showing relative strength to the market, no way. Why would you do that? Because it's "expensive"? Every stock can go much further in each direction.
Good Morning, seeer,
No, I didn't short it because it was expensive.
As said, I shorted AZO on the premise that the earnings Bearish Doji Star "could have been" a Wolfe Wave 5 upside Fakeout/Breakout. I've posted quite a few of those patterns that DID reverse to the downside.
However, when AZO continued to hold up and didn't reverse to the downside back below the Wolfe Wave pattern, I threw it in for a $35 gain.
In general, unless I had a Bearish Wolfe Wave possiblity, or something like a Bearish Doji Star, or a Bearish Hangman reversal candle, I wouldn't short a stock that is making new highs.
As I said at the end of this morning's post, I definitely wouldn't consider shorting AZO now, as the chart stands. It "could" reverse right here, but I still wouldn't be willing to short it unless/until I saw evidence of that. AZO is a candidate for a short squeeze right here, having closed at a new high yesterday.
I didn't know that "idiotism" was a word. I thought that it was "idiocy," so I looked it up and discovered that they BOTH are a word, so thanks for teaching me that ;)
You're welcome! :)
Btw this post was no offense category.
What I am trying to say if I want to short any stock and I look at the chart of AZO my answer is "no" immediately. It's in uptrend, so simple. But this is just my method. :)
GL!
Well, Atilla shorted AZO just like AMZN earlier. I told that (on Atilla's blog) in my opinion this is a bad idea. Maybe it will fall, but those stocks are very strong in a weak market so I think these stocks are not the best ones to short. There are a lots of better opportunities.
The same is true for BBY and VRTX.
Seeer,
In general, I agree with what you are saying about not shorting stocks that are in uptrends.
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