Regardless of the uncanny persistent bid beneath the broad market in spite of bearish technicals, the are still a few diamonds in the rough in regards to some of the active short trades on the site. Z (Zillow) would have to be at the top of my list of favorite my favorite trades right now, long or short. Z was added as a short setup just over a month ago while inside of a textbook bearish rising wedge pattern, complete with negative divergences in place. The stock went on to break below the wedge later that day (triggering an entry) and proceeded to backtest the wedge from below for just a few trading sessions before moving sharply lower to hit the first profit target for a 16.4% gain. The stock, just as forecasted in the scenario drawn before prices even broke below the wedge pattern, then went on to bounce off the primary uptrend line/first target and has since formed a distinct bear flag continuation pattern.
Now this doesn’t mean that things will or must continue to play out as expected but assuming that they do, and Zillow goes on to break down below the bear flag pattern, it will also break below the primary uptrend line as those two key technical support levels are one in the same. I’ve included the two previous daily charts for reference but used a 4-hour time frame for the updated chart in order to zoom in somewhat on the bear flag pattern and recent price action. To calculate the expected measured move of a bull or bear flag pattern, simply take the distance of the flagpole (as shown by the dotted yellow line) and add it to the top of the pattern (as shown by the dotted yellow arrow, an exact duplicate of the flagpole). Coincidentally (or not, in my opinion), the bear flag pattern measurement comes in exactly where my original second and final target was/is listed. As always, I list my price targets on short trades slightly above the actually support level/expected bounce level as to help assure a fill as stocks will sometimes bounce just above support in order to burn both longs looking to buy there as well as shorts looking to cover. As Z will offer another objective short entry on a break below the bear flag/uptrend line, it will be added back to the Short Trade Setups category in addition to remaining an Active Short Trade for now.