As mentioned in the previous post, there are two recent posts covering SCTY as a trade set-up, I just happen to like where it is sitting right now and the way it is behaving and would like some exposure to it.
Here are the charts...
This is the H&S top, the right shoulder is a bit extreme, but considering the momentum in this stock and window dressing, I'm betting a lot of that action is/has been window dressing.
The right shoulder has a bit more volume than it should have for the price pattern, but the declining volume in to the rally is exactly what H&S volume confirmation is all about.
I'm using the blue version of 3C on these charts, the orange version from previous posts is giving the same signals, but considering the momentum in this stock and the industry group, the faster blue version is more appropriate.
At each of the significant top inflection points through the entire H&S we have a leading negative 4 hour divegrence.
This does not have a significant daily negative divegrence, that's one of the reasons I went with a half size position, but it's also a relatively new issue with less than 2 years of trading.
This is the 60 min chart from confirmation to a leading negative right at the top of what looks very much to be a right shoulder which is inline with many stocks in the momo category as well as the IWM/Russell 2000 which is excellent overall market confirmation.
The 30 min chart shows the same, the only thing I question is whether we get a head fake forming the Chimney that is often seen in these rounding tops, "Igloo with a Chimney", that's the kind of event that I'd use to add to the SCTY short position and bring it to full size and still have alerts set for a gap up warning me of a potential chimney so I can quickly look at it and decide whether to add or not.
The 15 min chart with accumulation, not anything spectacular, but enough to get SCTY off the neckline and in to a right shoulder rally,
note the stop-run/head fake move just before the upside move began, it is this kind of move we see about 80% of the time before a reversal in all assets and every timeframe. That is also why I'm looking for a possible chimney at the top of the right shoulder as it is the exact same concept.
10 min, just showing confirmation through various timeframes.
The intraday 3 min chart looks like a good timing signal, as do the shorter charts.
Like this 2 min, this seems to give us a very clear timing signal as market makers and specialists typically will position themselves (their trading of their own account in stocks they make a market in use to account for about 30% of the stock's daily volume) just ahead of an anticipated move as they are often the ones who filled a large order and know when it's about to move so these shorter timeframes tend to be useful for this kind of timing, just like they showed Friday's 1:15 crash on no news, no catalyst at least 30-45 minutes in advance, that appears to be market makers/specialists, maybe HFTs getting out of the way intraday in anticipation of something they know is about to happen.
And the 1 min chart.
I will probably have a stop of something like $75.60 or so on a closing basis, I don't want this one getting away from me, but I'll also consider what the charts and market tone looks like. I'm giving this a wide stop because of its volatility and just taking on fewer shares to allow for a wider stop. The way margin works with most brokers, a position of the profits from a successful short can be put to work and the short can be added to, unlike a long position in which you have to close it to have use of the gains or inverse (short) ETFs which you buy long.
I wrote an article about how it is possible to make more than 100% on a short as that is one of the arguments against shorting stocks, that they can only go to zero (100% gain), but this is actually not true, you can make more than 100%, here's the article,
Making More Than 100% on a Short
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