Bonds – Are We at Near the End of this 3-Wave Structure??

I have been waiting for the TLT to break below the low from February 21st to possibly begin the completion of its current bigger time-frame price structure … today price broke below that $116.51 level and I think the next swing trade in bonds will be to the upside.  Here is what I am seeing. Continue reading

Where to Next?

The NASDQ 100 Index has just broken above an important level and we should see in short order, what the market has in store for investors.  Here is the daily chart and three possible roadmaps for the tech market …

NASDQ 100 Index ETF (QQQ) – Daily Chart

The April 18th pivot high for the QQQ was $167.00 … that level was taken out with today’s price action.  By doing so, you have taken out an obvious prior high/resistance level, and one that the entire market will take note of.  Many algorithm trading programs will attack breaks of obvious resistance/support levels, and that is why you often see the market break to new minor highs/lows before reversing.  In essence, the market traps traders playing the initial break, and you see those “weak hands” get rinsed out of their positions by the stronger, more sophisticated trading entities.

So basically, now that price has broken above the prior resistance level, we are either going to fail and reverse, or we are going to gather momentum, and have the MOMO traders jump on this latest move and we should gain steam as we march towards prior major highs.  I have labeled this bullish scenario as #1 on the above chart … the move off of the last low will need to push through the “ABC” extension target zone of $170.05 – $173.69 if we really are headed to new highs.  Typically, I would expect for price to make a new minor high, and then pull-back slightly to test that break – if the move is real, it will trap sellers at the high and steamroll through them.

Scenario #2 is the bullish scenario I would rather see unfold … in this case, price will fail at this break of a prior pivot high and head down to SLOT support.  From support, price would begin moving higher thereby trapping traders who think that a Heads & Shoulders pattern was about to confirm and price was about to head lower.  It is this outsized opinion and short position that fuels the bigger, more sustainable move to new highs.  In essence, bigger corrective moves prior to an attempt to break higher usually leads to a higher odds chance of that break succeeding.

For the possible bearish scenario, (Scenario #3) I would think that we need to fail here as price moves above the obvious prior minor high, likely in the extension target zone.  Price would then correct lower and slice through minor SLOT support at the $160.92 – $156.86 level.  As price breaks below the prior lows, there would be an outsized chance that price was just setting up an even bigger squeeze that could fuel a move higher, but more likely, this type of move would signal some bigger corrective pattern or even the beginning of a bigger trend lower.

Bottom Line … in any of these case, traders should be paying close attention to closing daily and weekly charts to see what type of move is confirming itself.  I will try and update what I see as we go along.

Also, note that my charting software is painting the past 4 daily candles yellow, which visually warns me that trend strength has contracted to the point where trend was now officially in the “Contraction” zone – what follows contraction?? Expansion does … should be an interesting next couple of weeks/months.

Cheers … Leaf_West

AMZN … Where will the Music Stop?

AMZN is paying the price during this market correction for being so widely held and for having run so hard for so long.  Where is support likely to re-appear?  No one, knows and I think that will depend almost entirely on when the tech market gets a bid finally.

Here are the levels I am looking at …

AMZN – Weekly Chart

The weekly broadening price formation has seen price pullback to the upper support/resistance line.  Will price find meaningful support here at around $1375??  Maybe …

AMZN – Daily Chart

On the daily chart, I can see what looks like a nice band of prior volume in the $1125 – $1200 zone … with that zone in mind, I decided to sell some OTM put options that expire before the next earnings date (April 26th).  I sold some of the $1150 puts that are going to expire on April 20th.

AMZN – 195 Minute Chart

I continue to trade AMZN as my main focus intra-day, but I am not yet prepared to hold any long/short position overnight.  Selling some OTM puts at that $1150 level is a much safer way of making a multi-day bet on what will happen to AMZN over the next couple of weeks.

Cheers … Leaf_West

TSLA Update – December 11, 2017 …

TSLA just took out the prior pivot high that I was talking about last Friday (click here).  I have begun positioning for the next move lower by selling Dec 29th $355 calls.  I have started small as is typically the case and will add to the position over the next couple of days.  I received a credit of $0.90/share.  I typically also day trade/follow a stock more closely while I am waiting for the pivot high and change in trend direction to get underway in earnest.

I will be tweeting/posting when I become more convinced that the new trend direction has begun.  The stock may stay elevated until year-end, but I don’t think we are going to get above $350 before year-end.

Cheers … Leaf_West

AMZN Update – October 23, 2017 …

Earnings are scheduled for after the close on October 26th for AMZN … I posted on October 18th & 19th (click here) the reason why I had started a bearish position on AMZN and today’s close saw AMZN push right into the area that I thought would hold going into the earnings report.  Here are the updated daily charts …

AMZN – Daily Chart #1

The daily ATR support level and the lower parallel line are right here where AMZN closed today … I think this level will likely be where AMZN is going into its earnings report this week.

AMZN – Daily Chart #2

I suspect that any bounce coming out of the earnings report will be the bounces I will be looking for to get more aggressive in shorting AMZN.  I have a Nov 24th weekly put spread (1000/980) that is trading at about $13 currently vs the $8.72 I paid on the 18th.  Max profit is $20, so I will see where AMZN is trading tomorrow to see if I want to take partial or entire profits before the earnings on Thursday.

Cheers … Leaf_West

AMZN Update – October 19, 2017 …

I wrote an update on AMZN yesterday that raised the possibility of the stock making a possible Wave 2 high of a new possible trend or at best a Wave 2 high of a large sideways consolidation pattern (click here).  The stock is about $13 below where it was when I wrote that blog post and it looks like it is possibly testing a break of the weekly broadening price pattern that I have been tracking for AMZN.

You might say … whoop-t-do, price is breaking some imaginary price pattern!!  I say beware when price breaks price patterns, because it could be the early warning of a change in trend.  Here are the charts … Continue reading

WFC Update – October 3, 2017 …

Here is the bigger broadening pattern that I have been tracking since late 2016 …

WFC – Weekly Chart

The broadening pattern seems to be giving traders good levels to trade against … I think that the median line will act as resistance here.

WFC – Daily Chart

The daily chart shows that price is extended here as we push into that weekly pattern’s median line.

Cheers … Leaf_West

NFLX Update – October 2, 2017 …

NFLX reports their quarterly earnings after the close on October 16th.  After a huge July monthly move, the past two months have seen NFLX consolidate around the high of that large range monthly candle.  Which way will price go … I think that we should get some volatility in either direction regardless of which way it ends up going.  I would have to think that downside volatility could be a bit more vicious, due to the length of the upward run so far, but I remain open-minded.

You sometimes get the MoMo tech names to run higher into earnings, but maybe, NFLX will actually pullback into this next earnings report. Continue reading