FEYE Update

I'm not sure if anyone is still long this one (options or equity long-let me know if you are so I know if I need to post trade management charts or move to the next trade set up).

Yesterday with the news AAPL had a hack in to Icloud via the "Find my phone" feature sent security stocks like IDN (too low volume for me) and FEYE up... "In company news, worries over online privacy following weekend reports of alleged hacking into Apple's (AAPL) iCloud storage system was boosting investor interest in cyber-security firms"

As you know we were originally looking at FEYE for a nice short term upside pop, but a longer term possible base has developed which would make FEYE an interesting diversification stock if that base can hold and we get a decent entry (long).

There has been light profit taking in FEYE since mid-last week, but it was under-control and just profit taking, it seems since the news from AAPL, the profit taking has been a bit more substantial (sell the news)... However that's what would make FEYE an interesting trade set up as we don't want to chase this thing.

Here's the last update from mid-last week, you'll see some differences, especially among charts like the 2 min which were in line showing that the 1 min negative divergences were only light profit taking, that seems to have changed and I'm not talking about FEYE's price action, but 3C action, here's the post, FEYE Update

 This daily chart shows the kind of volume supported breakout that few stocks see anymore, especially the popular momentum stocks, this just goes to show that a healthy breakout still exists and the low volume new highs is NOT the "New Normal", it's a weak market.

Today's candlestick , thus far, is a bearish "Dark Cloud Cover" downside reversal candle, if it's on higher volume near the close, the probabilities are very high that it's an effective reversal to the downside which wouldn't be so bad for anyone interested in FEYE.

If you saw last night's post on how to use 3C , Low Risk, High Probability Trade Set-Ups Using 3C this would be a PERFECT candidate.

 This is my custom Cross-over Screen used to weed out false moving average crossovers using 3 windows, the price moving averages, a custom indicator in yellow (middle window) and RSI at the bottom, all 3 need to agree for a new long/short/sell or cover signal. To the left we have a long signal as all 3 agree and it's still in effect unless RSI-14 on a 60 min chart drops below 50, at that point we have a strong warning.

One other feature of this set up is pullback/consolidation areas. In a new signal, the first pullbacks are to the 10-bar yellow price moving average, deeper pullbacks longer in to the move usually hold up at the 22-bar blue price moving average (simple). A break below the blue average is another serious warning and when I use this system, it would usually trigger a stop, although this is only 1 component of analysis, it is rather reliable. I also watch for my custom (yellow) indicator in the middle window to cross below its 22-bar blue moving average of the indicator.

According to this screen as of now, the first thing we should look for is a consolidation that hold the 22-bar average on a 60 min chart, we may get more than that though.

As for stos for anyone who may be long FEYE and treating it as a trading position...

 The 30 min Trend Channel which held most of the trend, stopped out this morning at the red arrow and trendline.

The better trending stop below, 60 min...

 has a current stop on a closing 60 min candle below $32.00, this "may" climb a bit higher, but not lower, $32 would be the stop on a trending basis as this held the entire trend.

As for 3C...

 The 60 min chart caught my attention about 2 weeks ago as FEYE might be something more than a quick, nice upside trade. However, I'd want to see the "V" base strengthen and widen out which means a pullback back down toward the white trendline with the 60 min 3C chart advancing to a new leading high during the pullback, this would be VERY high probability for a new long on a longer term trending basis rather than a trading basis.

We do have charts that are longer than 60 min suggesting we have a long term base forming here, like the daily chart.

 The 30 min chart that was in line and improving with a nice leading positive divegrence/accumulation at the reversal process lows is now showing a relative negative divegrence, it's the weaker for of divegrence, but still on a 30 min chart. This could still lead to consolidation, but it's looking more and more like a pullback through price rather than a consolidation through time as the AAPL news gave them a great selling opportunity in to demand.

 The 10 min chart was in line last week, if you draw a trendline from point "A" to point "B", you'll see the negative relative divegrence.

 And the 5 min should be obvious, although not a horrible divegrence, not leading negative, it is showing weakening in the area.

 As is the 3 min which was in line last week

And the 2 min which was also in line last week.

I'd consider setting some downside alerts as well as some local consolidation price alerts.

I'll be looking for a move toward the recent lows around $27.50, this iss where FEYE would have the ability to prove to us there's a lot more to this stock than a nice trade on the upside and build a base that could support a trend as it would likely be a longer term "W" or double bottom stretching back to May, which is where the daily positive divegrence is, again, last night's article on 3C is perfect for this kind of set up and tracking it, Low Risk, High Probability Trade Set-Ups Using 3C

Let me know if you have an open FEYE long and need any Trend Channel stops.