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VIX 25 + Divergence Signals Short Term Reversal

download (2)Sold $BOOT  +7%

Got a buy signal (or cover signal) on the VIX today around 25.  A rare occasion where the market went up a lot, then the VIX also went up showing a ton of hesitation buy traders.  This is coming ahead important Fed news, which produced a ton of selling in the afternoon to wipe out most gains.  Tape is very much dominated by day-traders and algos.  Until volume picks back up, we’ll continue to get wide spreads and inefficient bid/ask pricing.  Use limits, otherwise slippage will own you.

The strategy would be to buy up some beaten up stocks, and continue to buy them as the VIX tightens its channel and retraces back to 22 level where we will be shorting heavy.



Long Cloudera [CLDR] – “Cloud Dare Yah”

Machine learning for the cloud.  This company is all about tomorrow, or maybe the day after tomorrow since its product solutions is exactly what will be in demand once our working economy shifts from dumb labor to routine robotics.  When will that be?  Maybe a few years down the line, but by then Cloudera will have positioned itself to have its 10,000 hours in and their software will be heavily sought after.  Data and what you do with that data is the life blood of machine hardware application.

For now, the stock hasn’t been treated nicely.  Even after beating on earnings, the stock still sells off.  It has nearly been sliced in half since in Q1 earnings report where it traded north of $20.   It’s still a baby stock, with its IPO priced last year at $15, and its marketcap right around 2 billion.  I expect EPS to go positive in 2019.

Tomorrow is earnings, and will traders finally buy into the cloud vision?  Let’s see.

I’m long CLDR through 2020 $15 calls.  The breakeven price would mean CLDR would need to get back to 18 in a few months.  It’s interesting that not even a month ago it looked like CLDR would hit 15.

TLRY, A Chart Fueled By Emotion



September 19, 2018 will be a day remembered for a long time.  There’s so much story behind the celebrity stock TLRY-  weed, speculation that medical companies need to hedge their position in the chance of legalization, a 400% 3 month return, a 1 day 94% gain, to a loss in mere minutes, several halts due to volatility.  This is 10x more exciting than any cliche stock-trading movie on Netflix.

High flying stocks are so hard to short because as this case study on TLRY shows, there can be up to 7 buyers that can squeeze this stock to new highs.

The low float allows for price manipulation, and allows for the tape to be dictated by emotion.  People see a chart, I see a game of poker.  And each rally, gap open, gap down, is like one card being flipped at a time.  So far the bulls are holding 3 aces, but the bears have 3 hearts… two more hearts and TLRY, which is trading at hysteria levels, will have the rug pulled out from below, and all the orders to buy will vanish.

An epic and once in a lifetime rally, creates an epic and once in a lifetime fade.  Bears keep playing this guessing game in TLRY sending it higher and higher, but even short sellers eventually hit capitulation, and that is usually the time to sell.

As always, I like to keep an eye on intraday lows, and use those as pivot points to short.  So 160 is the bottom of the channel and 230 is the top.  A break on any of these points will trigger another strong move.

My take? Since its greed all over it, I’m leaning on the bearish side.  At the very least, now is not the time to be holding longs.  Not even a trailing stop is useful as we have seen the stock being halted must have wiped out deep stops.



Bullish on BAND CPaaS

Bandwidth Inc., is gaining more users, and is a highly satisfying product for companies to use.

Trades at 52.05, at a market cap of 980M, there’s ton of room to grow.  Buying all the dips as this stock marches to 80 and tops off around 120.



Short SFIX



As mentioned before, the market is in clear “melt up territory.”  And this presents us with some great shorts.  StichFix (SFIX), has had unusual bidding behavior, probably from a combination of short covering and market makers bidding it up for no reason.  Anyway, this stock will trade in the 27.50 ~32.50 region soon, so an entry on this triple green bar is solid.  There’s a 10% upside and 40% downside at this price… SFIX has entered greedy territory and gonna snatch some of that premium back from the dreamers.


Short 43.

BABA the leader



To which direction?  170 is a massive and important line.  I held shorts in $BABA north of 200, covered under 180.  Played the usual bounce through $TCHEY, $MOMO.  Very important 10 point channel here between 170-180.  There could be a rebound, but getting to 200 would mean some serious news or new money, which is hard to grab here.  Short here or above 180, or any other related Chinese stocks with a stop at 190.

BABA has been riding the AMZN wave, so it’s more properly priced around 140.

Short ARLO – bid manipulation?

Where’s the buying at?  Some screwy business going on watching the Level 2s all day for the past week.   ARLO target is 17.50, around 10% above the amount the majority shareholders are holding.  Feels like an attempt to pump this.