Momo Taking Heat

They are selling Twitter in the afterhours market, a place inhabited by traders who deem the company insufficient in the manner of earning.  Price is moving just enough to give short sellers some hope at making a profit.  However, I would imagine the opportunity may be a short lived one, especially given Tuesday’s Facebook earnings and Wednesday’s FOMC business.  If you look at a chart of trade since the IPO of TWTR, you will see no real movement has occurred over the last year—just a sine wave through time.

I put some broad strokes on the chart, and essentially any trade confined within these levels is to be considered noise.  A conviction break and hold below ~$45 allows the bears an early advantage in initiating discovery.  After hours it has traded as low as ~$42.  It will be interesting to see how this trades come cash hours in the manana.  Until then, and even if I had been on the winning edge, it is best to save dancing the tapioca until after you have booked the trade.

In other news, the beaten back buyers inside of today’s /NQ_F could not be overwhelmed and as a result we saw a late day push higher.  The order flow became very clear just before noon New York when opening swing high, overnight low, and the daily midpoint all converged at 4027-4026.50.  We traded down into the level, found an initiating buyer and the rest was history—clean rotations higher suggesting the intermediate term buyer from last week is still active.  The only caveat is we printed a P-shape profile suggesting a short squeeze but no real initiation.  And with a busy week ahead, month-end, and the massive V-shape in our wake, price might want to test a bit lower come tomorrow.  However, the sellers are tasked with making an aggressive push at this point after merely reacting and absorbing today.  Buyers are innocent until proven guilty.

The scene under the sheets was a bit different.  Each rotation lower in the Nasdaq, even the minor ones, managed to put heat on momo stocks.  However, from the heat CYBR came blazing higher.  It was a bit of a mixed bag with correlations lower then we saw a few weeks back, but overall participants were not rewarded for assuming risk in aggressive growth names.

My Tesla looks weak too, very much a proper looking continuation lower chart.

Tomorrow morning looks to feature a few gut shots.  It comes with the territory of swing trading.  Earning season is fun, yes yes?