HLF Update

Earlier today I mentioned an article I had seen while browsing about some big players short HLF and the possibility of a short squeeze. I personally don't like chasing anything so it's not my kind of trade yet, but has the potential to be. As I said, it depends on your risk tolerance and I've received several messages today from members who made a nice chunk of change on pretty quick trades in HLF long today.

I'm hoping that what I'm starting to see is going to lead to the kind of trade I prefer, the kind of traded I hinted at in the first post.

Time will tell and may provide us with a great trade because despite today's decent gains, this was no short squeeze. On the other side of the coin, I don't really like when bigger players start letting on as to what their positions are, it's just not the way things are done on Wall Street, so with all of that in mind, the only thing that matters to me is the signals and the set up; if they come then there's a decent shot at this, if they don't, well then there's always another bus.

Either way I'm happy to hear some of you made money on this one today.

The charts...

 The daily chart, that's about a 50+% drop since the middle of October where distribution (short selling is also distribution) can be clearly identified. I'd think the big fish are pretty happy with that and I'd think they'd like to be trying to cover this position unless they think they are going to run HLF in to the ground which I doubt. The question is, "Are there bigger, faster fish that can front run these guys and squeeze them?". It's kind of hard to gauge unless you actually tried to get some shares short and see if they are available or not and I'd rather not do that, but I'm quite sure the Iceberg hunting HFTs have been pining the heck out of HLF to figure that out.

 On an intraday basis, a lot of intraday swing traders (not day traders anymore), watch the 50-bar 5 min chart, HLF is breaking under that average which should put selling pressure on it intraday or at least act as resistance. Volume has also dropped off noticeably, not the stuff of short squeezes and the price pattern just doesn't look like a short squeeze, not that I'm trying to determine whether there was a squeeze or not, there was not, at least not today.

The 15 min. 3C chart shows where it appears most of the positioning took place or at least where it reached a crescendo, around mid October as there's a deep leading negative divergence into the highs of this range, since then it's stayed in a leading negative divergence so the short positions were in place for the most part back then.

 This 5 min leading negative divergence is more like  fuse to ignite what was already in place, we also have a 5 min leading positive divergence today. Part of this could be traders looking for a short squeeze taking up long positions, but it could also be the big fish covering their short, they know they'll have to take a little dent to get out of a position that large, it's just the cost of doing business. I'd rather have seen a large positive divergence in place before any upside movement took place.

 This is today's 2 min intraday chart going leading negative so this is one of the reason I expected some intraday downside from here and why I personally would have taken profits off the table for the day.

 The 5 min chart was leading positive going in to today from Monday, it also has lost momentum and is going negative intraday.

So what's the plan, the set up from here? It's roughly the same as the first post this morning in which I want the trade to come to me and on my terms rather than chase it, but that' a matter of risk tolerance.

I'd like to see this 15 min chart (note the leading negative divergence before the drop) or rather price, pullback, perhaps to the recent lows, maybe even a break below those lows. At the same time I want to see the intraday 3C charts go leading positive and have enough strength to move this 15 min chart to a new lading positive high like the orange arrow, at that point that's where I'd be comfortable entering this trade whether it' a short squeeze or perhaps a double feature in which they run it down, hop the tracks and run it up with retail thinking it's a short squeeze, if that happens, they likely leave retail with the bag and let it drop again.

So one bridge at a time, I'd wait for a bit of a pullback and make sure 3C is more positive than it was today. If the trade comes to us, GREAT! If not, then there are plenty more.