Quick SCTY, NFLX, Z Update

All of these are shorts we recently entered, all are doing very well thus far today (although for shorter term trades like the NFLX 465 puts, we need to watch them a bit more carefully) and all shared concepts that we use in every asset.

SCTY, if you recall was one I posted a Trade Idea/Trade Set up looking for something VERY specific...

First the original trade idea, Trade Idea/Set Up: (Longer Term) SCTY Tuesday June 24th

"Typically with a Doji/Star as a reversal candle, the confirmation candle of a downside reversal in about 50% of the cases over the next day or two, will gap up and then close down forming a bearish engulfing candle, confirming the downside reversal, that gap up with the 1-5 min charts going negative is an ideal entry and the lowest risk entry for a SCTY short position which I'd view as a longer term trending trade because of the size of the top.

I'll be setting alerts for a move/gap above $71.20 to look at a short in SCTY."

Trade Idea: (Swing Trade Plus) SCTY, Monday June 30th

"I'm going to open a partial (half) size SCTY equity short here and will consider adding to it if there are any unique developments that have high probability outlooks like the gap up with distribution that would be a high probability bearish confirmation Engulfing Candle, in fact I might even wait for something like that to be formed."

That's exactly what we got, this is the head fake concept, but also multiple timeframe analysis. Take a look.

 Another concept seen on the daily chart of SCTY which is a volume confirmed H&S top price pattern, is the parabolic move which I never trust as they end as extreme or worse than they start which we are already off to a good start on that concept, I just don't trust them and I wasn't worried about SCTY's +50% right shoulder because of this. The gap up is when I filled out the position as the charts were deteriorating so fast, I had already opened a partial short position in SCTY.

Then, Filling Out the SCTY Short Position Monday July 7th

"You may recall there were a few things I was looking for in the initial SCTY trade set up, one of which was a bearish engulfing pattern which is playing out on a longer 2-day chart which is even better as far as I'm concerned. Last week I brought the partial position up to 2/3rds size on the gap up as that was the first step in a bearish engulfing candle and the lowest risk entry (the phased in 2/3rd size position is up about 3% ), I said I'd fill it out on the confirmation, although we haven't closed there yet and there may be a better entry intraday later, I'm not that concerned about it, I'm looking at this from a bigger picture perspective."

on a 3-day chart, which is the only way I know how to give some target assumptions using candlestick reversals as they don't carry a target implication, but obviously the larger timeframe the signal, the larger the move. The chart shows a flawless typical reversal with a strong momentum candle, a loss of momentum or indecision (also a balance in supply/demand) and the gap up above the real body of the star and close below it, the confirmation candle. Recall this it the top of the right shoulder of a H&S top, 2 of only 3 places I'll short the price pattern.

On an intraday 3C chart since the gap up, we could immediately see there was no confirmation, but distribution on the gap up which made an entry/add-to a safer bet as it is the best price point with the lowest risk.


As for NFLX, there are two positions, an equity short for the longer term and a July $465 put for the near term which is up over +70% today, I'll need to watch that closely.

Both NFLX posts from July 1, the day after window dressing for Q2 ended.

Opening NFLX July $645 Puts Now (although that should read $465 puts, I corrected it later that day and had mentioned the $465 idea numerous times earlier that day).

And right after that post, NFLX Charts

And right now...

 This is the reversal process I often describe as being shaped like an "Igloo with a Chimney", the chimney is a head fake move that typically precedes the actual reversal, it builds momentum, there are actually a lot of reasons for them and there are links on the members' site to the top right with two articles, "Understanding the Head Fake Move",  we entered the NFLX move on that head fake move, it's emotionally difficult to short/buy puts in to price strength, but if we can confirm a probable head fake move, it's the best entry and lowest risk.

 Again on multiple timeframe analysis (2-day) there's a perfect candlestick reversal with a confirmation candle to the far right, this is what we want to see on what was similar to the top of a right H&S shoulder.

And the 3C chart that made confirmation of the head fake move simple, in the red box.

As for Z, there were a lot of things I liked and only 1 thing I didn't...From Wednesday July 2nd, Trade Idea: (Swing) Z

"I'm going to open a speculative (1/2 size) short position in Z....As you know there are VERY FEW "V" shaped reversals which this would have to be to work, the reversal process is something I take seriously, the only reason I consider even taking the partial short is because of the parabolic move in Z, they tend to have much narrower reversals areas and a more tight "U" or even "V" shape and as you know, most parabolic moves end just as badly on the downside as they were impressive on the upside."

Subsequent posts showed how Z widened its reversal process which is what I wanted to see.

The charts (and these look worse now)...

 Z has broken the increased ROC trendline of price which is seemingly bullish, but the change in character is often a red flag that something big is about to change in the trend, often seen as a transition between stages.

 "Z" broadened out the reversal process which I'm happy to see, it was VERY narrow when first entered.

And the chart that made the decision easy (really the intraday charts falling in to line were the easy timing part, the easy strategy part is above), note the leading negative divegrence at a new low right in the reversal process area.