July 21, 2020

Volatility Reports 7/21/20 Fang Index

Panic Buying is Gripping the Premier Fang Stocks

On the 7th Volatility, Reports pointed out the occurrence of a TE#1, a backdrop of emotional buying. Furthermore, all of the below is in the context of the S-T tidal system flipping from long to short on the Nasdaq plus MarketMap’s annual fractal providing the big turn for the year this week.

The chart used today again shows the panic buying highlighted in red followed by a shallow correction. As a rule, 99% of the time a TE#1 leads to a “V” shaped bottom or an inverted “V” top following by a chipping range. The weekly bar sees the trend as moving into an old and low volatility background.

The weekly bar on the left uses our set of OB/OS oscillators, which is not used for the traditional divergence analysis. Rather the model looks for negative reversals at a top, when the oscillator makes a new high but the market does not.  The other sell signal is when one of the indicators is trending up and the other is diverting from the other indicator. This out of gear is a sign that momentum is about to change. The purple lines show the most recent sell suggestions.

The intraday chart of the FANG index shows an  EWT set up of five down and three up; plus it reveals a Gartley set up for a low-risk short opportunity.  The inverse ETF is a controlled risk vehicle to use.  Place a stop around the old historical high but above point “2”. 

The old high of the Fang index back in January 2020, just below 4,000 would be a target going into the end of the year.  That would put the inverse FANG at 50. The current price of 14 1/4 to 15 has a risk to new lows, out at 12.  A good risk to reward.

A number of the generals leading the Fang index are showing signs of “poor” buying. TSLA has made a climatic top. It has risk to 600. While I have heard many critics of the companies founder, he is a true genius who grounds what he does on the first principle thinking and I admire him. Be that has it may, the stock is toast here based on my first principle thinking, only time will tell.

volatility Reports have previously pointed out the peaking process of Netflix two weeks back and used the outside world’s back story of the companies compete. Especially now tih NBC/Universal getting into the field. What coincided with the launch of Peacock was the panic buying in NFLX both S-T and I-T and its first break of a support level at 501. Now the 480 to 476 area is pivotal, a break there should pick up a following.  The context behind the market supports a trending move, with a TE#2 on the daily bar.  The weekly bar has given a sell signal based on our OB/OS model.

Lastly, Google has made a climactic peak. Like the other generals, it made its highs on FOMO type buying with the OB/OS model giving a sell signal in the same time frame. A cross under 1527 should be the next bearish sign.

Great and Many Thanks,

Jack F. Cahn, CMT

Contrary Thinker since 1989,
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