ARKK Short Scenario
Good evening,
1. What am I looking for?
- Re-Test of 116$ (possibly Gap fill of 116.75$) with low volume, followed by a high volume drop below the 200s daily moving average
- Drop below 111.5-111.3$ area with conviction
- Follow-through to 106$
2. Technical Reasons:
- 111.5$ area is strong Support! (0.38 Fibs from March 2020 + 0.78 Fibs from March 2021)
- 112.85$ is 200s daily moving average line
- Downward volume is increasing; However, LOW volume encountering the 111.5$ area, indicating a potential bounce back!
- Broke below Trend-Channel that started March 2021
3. Game Plan:
At this point, entering a short position (or puts) would be chasing the move because it went down for 7 consecutive days!! Do not chase it now. I strongly expect a bounce back to re-test the 116$ area at which a gap is to be filled and at which 0.61 Fib resistance is. I want to see low volume at the rip and high volume at the dip back below the 200 daily MA. Then I will enter a position to look for the, then very likely, break of 111.3$ My first profit target will be 106$. Stop-Loss above 200s MA.
-> This setup is A+ since a lot of support (200 MA, Short- and Long-Term Fibs, Trend-Channel) is broken if entry-conditions are satisfied!
4. Fundamentals / Macro / Sentiment:
- Earnings Season is ending (most important companies already reported)
- SPX looks like it is topping out and a correction is due
- Negative Sentiment in Meme Sto(n)cks, of which ARKK largely consists
Do not chase and wait for confirmation, 7 consecutive red days may be followed by a bounce! Wait for consolidation and attack with conviction after that.
I am looking forward to reading your ideas. Thank you.
1. What am I looking for?
- Re-Test of 116$ (possibly Gap fill of 116.75$) with low volume, followed by a high volume drop below the 200s daily moving average
- Drop below 111.5-111.3$ area with conviction
- Follow-through to 106$
2. Technical Reasons:
- 111.5$ area is strong Support! (0.38 Fibs from March 2020 + 0.78 Fibs from March 2021)
- 112.85$ is 200s daily moving average line
- Downward volume is increasing; However, LOW volume encountering the 111.5$ area, indicating a potential bounce back!
- Broke below Trend-Channel that started March 2021
3. Game Plan:
At this point, entering a short position (or puts) would be chasing the move because it went down for 7 consecutive days!! Do not chase it now. I strongly expect a bounce back to re-test the 116$ area at which a gap is to be filled and at which 0.61 Fib resistance is. I want to see low volume at the rip and high volume at the dip back below the 200 daily MA. Then I will enter a position to look for the, then very likely, break of 111.3$ My first profit target will be 106$. Stop-Loss above 200s MA.
-> This setup is A+ since a lot of support (200 MA, Short- and Long-Term Fibs, Trend-Channel) is broken if entry-conditions are satisfied!
4. Fundamentals / Macro / Sentiment:
- Earnings Season is ending (most important companies already reported)
- SPX looks like it is topping out and a correction is due
- Negative Sentiment in Meme Sto(n)cks, of which ARKK largely consists
Do not chase and wait for confirmation, 7 consecutive red days may be followed by a bounce! Wait for consolidation and attack with conviction after that.
I am looking forward to reading your ideas. Thank you.
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