BABA Update

Yesterday I posted this trade set-up for BABA, Trade Set-Up: BABA which required BABA to break UNDER $80 on a stop-run head fake move, at which time I'd look for signs of stops being hit like large volume and them also being accumulated.

I entered a partial position later in the day, Trade Set-Up: BABA, but with the caveat that it was a half size position and the trade set-up idea still stood and would be the second half of the BABAS calls for a short term trade/bounce so long as the 3C charts confirmed a head fake/accumulation of the stops.

So far we have the break of $80 and we have the volume...

 BABA breaking below support at $80.10 and the psychological level of $80 which is what we were looking for.

Initial volume on the break looks like the stops we anticipated to be lined up at the psychological magnet were both there and hit.

I'd like to see an intraday capitulation / selling event or "Flame out". Typically we will find a bullish candle like the one at the white arrow, I would ideally like to see the largest volume surge on that particular candle so you'll have to check multiple intraday timeframes.

 The longer intraday charts which had positives yesterday suggest we will see accumulation and this will be revealed as a stop run/head fake move. I suspect the broad market would turn, around the same time as BABA if we are to get this set-up.

I expected market weakness this morning based on the way the 3C charts closed, but it is still very early in the day.

There should also be some sort of reversal process in BABA even on a head fake move, of course it will be proportional to the move itself and not a 1 or 2 day long reversal process, but it should have something like a rounding bottom or "W" bottom as drawn in above. I'd need to see the fastest 3C chart like this 1 min above, show a clear positive divergence indicating the stopped out shares have been accumulated.. If that happens, I will enter the second half of BABA calls to fill out a full size position as this was yesterday's EXACT trade set up idea as linked above.

As for the broad market which will have a strong directional pull on BABA as well,  in addition to the normal selling /capitulation event or flameout intraday that you'll be watching for in BABA, look for the same in the market averages and don't forget to watch the intraday NYSE TICK index for early warning of a possible change in direction via market breadth...

NYSE TICK 1 min-look for an upside break of the channel...