SCTY Trade Set-up (long term) / Follow Up

We've been tracking a potential bounce in SCTY which was first posted on Thursday of last week (8/28), SCTY Trade Set-Up. If you are not familiar with the longer term short trade set up, essentially shorting SCRTY which is already an open position with a little room to add, then the link from last week makes the case for the short with longer term charts as well as the expected bounce which we got a glimpse of yesterday (up +4.77% ). I think there's more to this move and would like to add to the position which is nearly filled out a SCTY sits at the top of a right shoulder, my second favorite place to short a H&S top.

The current open short was entered with the intention of phasing in and because of the good entry, it has left us in a good spot to add to SCTY as the current short position is at a gain of nearly +4% which isn't anything big, but for a lateral, choppy top it's  good entry.

Yesterday I posted a follow up to last week's SCTY trade set up, SCTY Update and market implications The "Market Implications" aspect of the post had mostly to do with going through the candidate watchlist and getting the overall feeling that the much anticipated head fake pop higher above the reversal process range as we usually see before a stage 3 market like this turns to stag e 4 decline, is still likely despite the weakness in the market picking up which is expected as the main trend is not the head fake move, that's a bridge, it's the move to stage 4 decline.

The shorter term chart for SCTY were addressed in yesterday's post as well as the follow up of how a short term head fake move works as it did in SCTY to create the momentum needed to push SCTY higher which it did, above the original post when we first saw a head fake bounce in SCTY coming last Thursday.

Here's today's update as I  like SCTY as a long term trend/position short and any bit of price strength is essentially a freebie, buffer or gift from the market, although they are emotionally hard to enter at the time as you are going against price. This is where the longer term charts as posted last week come in handy as they are the highest probability resolution for any short term moves.

Again, I would set upside price alerts for SCTY as there's a chance that today ends with a move to the upside in the afternoon (typically after the max-pain options expiration pin is lifted.

This is a mature H&S top at the right shoulder, in the larger trend / cycle this is very late stage 3, just before stage 4 decline which officially starts as we descend from this right shoulder top. The area I'm targeting for an add-to or a new SCTY short position is the red box to the right, approx. 470-475, but $80 would be even nicer. This is one of several equities that is in near perfect position for a position/trend short in terms of price, risk and timing.

Here's why I think we still have a good opportunity in SCTY, as far as why it''s a good opportunity, again, see last week's SCTY set u[p post linked above.

 This is the H&S from the perspective of a 30 min 3C chart, distribution started in to the left shoulder, picked up with a larger divegrence in to the head and is extreme in leading negative position at a new low in to the entire right shoulder run, this kind of sequential deterioration is exactly what we want to see in a top pattern and I post SCTY so often recently because the last really good entry has a very small window, thus the need for price alerts unless you just watch it all day.

 This 10 min chart is the basis of the entire move, as you can see it picked up short term accumulation in to a head fake move lower explained in the first post and yesterday's and it's still valid for the time being.

We will see deterioration of this divegrence set in on the fastest timeframes like this 3 min chart first as it makes its move higher, that's what we are looking for to short in to and even after the retracement of much of yesterday's gains, it's still in leading positive position which likely means the target range for smart money's shorting or selling is higher, I already mentioned where I'd be setting alerts, but these are not for information, they are for action.

This is one of the better looking shorts out there right now from a price, risk and timing perspective if you like position/trend type trades, although we can swing trade around this one too.