• AA - Sep 22 201420140922
  • AON - Sep 23 201420140923
  • AXP - Jul 25 201420140725
  • BXS - Sep 23 201420140923
  • FFIN - Aug 14 201420140814
  • FISV - Sep 26 201420140926
  • FRC - Jul 31 201420140731
  • GMCR - Sep 25 201420140925
  • HSY - Jul 21 201420140721
  • KBE - Jul 21 201420140721
  • KIE - Jul 31 201420140731
  • KRE - Jul 31 201420140731
  • LYV - Jul 29 201420140729
  • OZRK - Sep 23 201420140923
  • PACW - Jul 17 201420140717
  • PNC - Jul 17 201420140717
  • SAVE - Jul 24 201420140724
  • $SPX-SPY - Sep 25 201420140925
  • TSLA - Sep 23 201420140923
  • WAB - Sep 15 201420140915


Short Setups

Stocks in a bearish pattern formation that are poised to break-down and provide an objective short entry. Also included in this category are stocks that may have already triggered a short entry but still offer an objective entry or add-on to the position at or near current levels such as a bounce back to a key resistance level.

Sep 262014
 

FISV (Fiserv Inc) will trigger a short entry on a break below this 3 year primary uptrend line/bearish rising wedge pattern. T1 (1st target) is 54.38 & T2 (the final & preferred swing target) at 48.05. Stops to be determined upon entry but my expectation is that a breakdown of this pattern is imminent at this point and if so, my likely stop would be just over the recent highs of 66.11. If FISV were to trigger a short entry soon, this trade would offer a very attractive R/R of about 5:1 to the final target and 3:1 to the first target (where a reaction is likely).

 

click here to view the livedaily chart of FISV       click here to view the live weekly chart of FISV

Back on July 22nd, FISV was recently added as both an aggressive short entry (Active Trade) at 62.30, in anticipation of a breakdown below the trendline, as well as a Short Trade setup with an initial, conventional short entry or an add-on to the aggressive trade to be triggered on a break below the trendline. With prices yet to trade below the trendline, this is really just an extension of that previous, untriggered trade setup. However, the stop criteria for the aggressive trade was a move over 64 which just recently occurred. Therefore, that trade was stopped out and moved to the Completed Trades category. However, for anyone who might have shorted FISV back then and still holds a position, this trade still looks very promising from a longer-term perspective so consider a stop slight above the recent high of 66.11 or calculated on a 3:1 R/R to your preferred swing target, depending on your cost basis for the position.

 

Sep 252014
 

GMCR daily Sept 25thGMCR (Keurig Green Mountain, Inc) will trigger a short entry on any move below 125.35 (5 cents below the 8/22 gap). T2 is my preferred swing target at this time with a final target (T3) at 84.02. Suggested stop slightly above the recent highs for those targeting T2 or T3 with a tighter stop suggested if only targeting T1.

GMCR was recently added as a Short Setup on August 8th with an entry to be triggered on a move below 112. The stock never did trigger an entry so the notes and previous charts on that setup have been moved from the Short Setups to the “Uncategorized” category (as untriggered trade setups never become Active Trades, hence, are not moved to the Completed Trades category). However, as with all previous posts, those recent posts on GMCR are still accessible by clicking on any of the “GMCR” tags, such as at the bottom right corner of this post.

The second divergent top highlighted on this 3 year daily chart of GMCR comes shortly on the heels of the recent, much larger divergent high (blue lines). Taken together, the bigger picture (dashed red line), shows a very powerful, divergent high going all the way back to February. Translation: I’m not looking for a quick trade on GMCR, rather a multi-month correction that will likely result in a drop well into the double-digits (a 33% gain if T3 is hit).

click here to view the live chart of GMCR

Sep 252014
 

Looks like the 50% Fibonacci retracement did the trick yesterday as the stopping point for the partial rise within the Ascending Broadening Wedge pattern. While the 50% Fib was one of the likely reversal points & more aggressive short entry levels mentioned in yesterday’s video, today’s gap down was the “conventional” short entry as the reversal & apparent move back down towards the bottom of the pattern had begun. The expectation on the partial rise short trade is for an immediate breakdown or relatively brief pause at the bottom of the pattern before continuing lower. Depending on one’s entry & trading style, a stop can be placed either above yesterday’s highs or lower.

As far as targets, personally I’m looking at this as the potential to morph into a longer-term swing short trade as we’ve already seen the small & mid-caps breakdown below key daily uptrend lines & the large caps ($SPX, $COMPQ, $NDX, etc…) are very close to doing so as well. I talked about the charts being “stacked” in the video, meaning that a simple breakdown from this 60 minute pattern could likely be the catalyst for a break below those much larger, more significant daily support levels, thereby triggering intermediate to longer-term sell signals in the equities market.

Here’s a quick look at the 60 minute chart of the SPY (which is breaking below the bottom of the pattern as I type) as well as the 2-hour chart of the QQQ, which has now fallen to a relatively significant uptrend line generated off of the mid-April lows. Therefore we have a breakdown on the intraday SPY chart with the Q’s at support and pretty much the same for each on the daily time frames (see $SPX, $COMPQ, & $NDX under the Live Charts page). Any solid break & especially a solid close below those daily support levels will likely usher in additional selling in upcoming days & weeks.

Bottom line: If you did not already short the partial rise, then it might be prudent to hold off now as we are at key uptrend line support on the Nasdaq and only trading slightly below uptrend line support on the $SPX daily. Another decent intraday thrust and/or a solid close below would be the next objective short entry at this time. Also keep in mind that we have been in a period of unusually low volatility for months now and with the Bollinger Bands pinching very tight, the odds for a very quick & powerful move, most likely to the downside IMO, is quite elevated at this time should the large cap indices break those daily & especially the weekly support lines.

Sep 242014
 

Early today I had pointed out the Ascending Broadening Top pattern on the SPY 120 minute chart. The video below discusses a very low risk, potentially high return strategy for trading what’s referred to as a partial rise within these potential topping formations. For those who do not have the time or inclination to watch the video, this strategy essentially entails establishing a short position on a partial rise off of the last (likely) tag of the bottom of an Ascending Broadening Top pattern. While a more aggressive trader might opt to begin shorting or scaling in short around the 38.2% retracement (where the SPY is currently trading), adding up to around the 61.8% retracement, with a stop not too far above, the more conventional, lower risk strategy would be to wait for prices to start to roll over before reaching the top. If it looks like the SPY has reversed and might be headed back down towards the bottom of the pattern, one could establish a short position at that point, with a stop slightly above that last reaction high.

The video below discusses the methodology behind this trading strategy as well as the reasoning for expecting a downside break of the pattern vs. an upside breakout at this time. I have also included an updated 60 minute chart on the SPY illustrating the strategy as well as an actual example of a very successful partial rise short on GDX posted here back in early 2012 (that chart along with the entire post can be viewed here).

 

Sep 232014
 
TSLA daily Sept 23rd

TSLA daily Sept 23rd

My notes & thoughts on TSLA virtually mirror the previous short trade on TSLA, just over a year ago today (which, fortunately, was the only other time I shorted this beast of a stock). TSLA was added as a short entry back then on Sept 13th, 2013 at 162.55 and went on to hit the top of the target zone for a 17.2% gain less than 2 months later and continued on to the bottom of the target zone for a 22% gain before reversing & continuing the bubble uptrend in the automaker.

The basis for this short trade, as back then, is the fact that TSLA has just recently broken down from a very large bearish rising wedge pattern, complete with bearish divergences on both the MACD & RSI. Also compare the short interest chart on this current daily chart with the short interest chart on the original daily chart from that previous post (click on the blue hyperlink above to open in a new window). As back then, the precipitous drop in short interest was undoubtedly a large driver in the sharp price increase in TSLA since the July 2013 lows as the short interest peak shortly after that and has continue to fall roughly inline with rise in the stock price.

As with that previous short trade, I have a target or support zone that I’m targeting on the stock although my current preference at this time is to cover just above the top of the zone, assuming that this trade pans out. Therefore, the sole & final target at this time T1 at 206.20. With TSLA currently backtesting the wedge from below following yesterday’s breakdown, the stock is offering a very objective short entry with a suggested stop over 265 (a 3:1 R/R) or lower.

Sep 232014
 
OZRK daily Sept 23rd

OZRK daily Sept 23rd

OZRK (Bank Of The Ozarks Inc) will be added as an Active Short Trade here around the 33 area in anticipation of a break below this primary uptrend line. More conservative, conventional traders might opt to wait for a confirmed break below the pattern before establishing a short position.

T2 (24.71) is the final & preferred target at this time with a suggested stop above 35.50 or below. A short entry at this time should be considered aggressive as not only is this a counter-trend trade but price are still well above this multi-year trendline. Although the stock has recently printed a divergent high & I continue to remain bearish on the regional banking sector, both OZRK & KRE (Regional Banking Sector) have yet to trigger a sell signal by breaking below their highlight support levels.

With that being said, I would not add OZRK as an Active Short Trade, nor short it personally, if I were not confident enough that a breakdown of the pattern was imminent at this point. Of course, that’s just my opinion based on my interpretation of the technicals on both OZRK, KRE & the broad market so as always, DYODD and only consider trades that are aligned with your own unique trading style & risk tolerance.

click here to view the live, daily chart of OZRK

Sep 232014
 
AON daily Sept 23rd

AON daily Sept 23rd

AON (Aon PLC) was added directly as an Active Short Trade back on July 25th immediately following the breakdown below this multi-year uptrend line. Following the initial thrust lower, AON bounced, largely in sympathy with the broad markets & financial sector,  to make a perfect backtest of the trendline from below. Following that backtest, AON went on to break below this minor, sub-uptrend line which formed a bearish rising wedge-type pattern just below the primary uptrend line. At this point, AON still offers an objective entry or add-on to an existing position with a stop-loss calculated using a 3:1 or better R/R (risk-to-reward ratio) based on one’s average cost to the sole profit target of 77.08, about a 12% drop from current levels.

click here to view the live, annotated chart of AON

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