Z Trade Set-up (swing+)

Z is one we recently traded short for an 11+% gain, Z Position Management and exited July 18th which was just about the dead bottom. In the linked post above from the exit I had said,

"I'm taking gains in Z short off the table, it's one I want to add to, but I figure I might as well add the entire position on a bounce and keep the current gains."

Z is also among the stocks I expected a bounce in (mostly momentum names) that I'd like to short in to the bounce, this is the list I'm a bit disappointed in thus far, NFLX, Z, P, TWTR, PCLN, AAPL, SCTY, TSLA. I posted the longer term charts in Monday's Daily Wrap so you'd know why I'm interested in them.

As for "Z", I DO NOT want to trade against longer term probabilities even if I think there's a pretty good chance it bounces, but what I do want to do is what I said above when I exited the last "Z" position, add a full position on a bounce. So this is a trade set-up, hopefully the trade comes to us on our terms and we have a nice entry with much lower risk.

As far as the longer term charts that have not changed, Z Position Follow Up has those charts so I'm not going to repost them, I'll just post what I think is relevant right now to a set-up for Z.

 I just wanted to point out this concept again as it works on all timeframes, it's basically nothing more than a change in character concept. at "A" Z has a nice stable trend and at "B", we often see these seemingly bullish increases in the upside Rate of Chance (ROC), these are more often than not red flags that something is about to change such as a stage 3 top, in Z's case it broke the trendline, we had shorted Z at $140.11 on 3C signals. At "C" it's looking like it's going to shakeout any shorts and lure in the "Buy the Dip" crowd as it sits on its 50-day and would likely need to move above the trendline to hit short stops or at least where the trendline was when "Z" broke below it.

The rounding area or bottom is what we refer to as the reversal process as reversals are rarely a "V" shaped event, HLF would be an exception yesterday, but that seems very much like it was an attempt by Icahn to humiliate Ackman on the day of his HLF "Knockout" presentation.

 As for my X-Over screen, it went long at the 3 white boxes and the screen kept Z long despite several moving average whipsaws on price as the custom indicator stayed long as did RSI (all 3 have to move for a new signal) and we did get a new sell signal recently at the red boxes, however it's not uncommon to get a bounce on a new signal like this or when a stock falls out of the Trend Channel. The buy the dip crowd can't resist these.

 The 15 min chart (see linked post above for longer term charts) is negative at the top around the area we entered Z short and you can see a positive divegrence at the reversal process area. This is a decent divergence and "should" send Z bouncing higher which is when I want to watch it for distribution as the longer charts have gone downhill and look for that next short entry. With the market in the state its in (I do think the IWM divergence does have some more left in the tank, but it's not at all like past bounces), I DO NOT WANT TO PLAY THE LONG SIDE OF THIS ONE LIKE WE DID WITH USO.

 The 10 min chart is confirming the 15 min chat as well in both areas and has a leading positive divegrence currently, not a huge one, but enough to get the job done.

Short term, and this is why I posted this now, the intraday charts (used for timing) look like Z is just about ready to go, a failure here of this set up would be disastrous for Z, I doubt it fails, but I think the overall market has more to say about that, even though most of the stocks on the list did bounce on a very weak market.

If you're interested in a Z short trade which I think can be played either as a swing position like we have done or can be held as a trend position given the right risk management/stop set-up, then I'd make sure you set upside price alerts.