TZA Small Cap 3x Inverse ETF Daily Chart Inverted H&S
The inverse ETF's are plays that move opposite of the underlying index. For TZA, it seeks to move three times the amount of the small caps in the opposite direction. If the markets go up, TZA moves down, if the markets move down, TZA moves up. TWM is similar only it is a 2x inverse ETF that moves double the amount. These are highly dangerous trades and many traders have lost their shirts on these whacked out steroidal tickers. So only play them if you no longer need your shirt. The black lines show the falling wedge and positive divergence that Keystone described during February thru April that bounced TZA. The green lines show an inverted H&S now in play; head at 16.50, neckline at 21.00, target 25.50, which happens to be a gap fill and strong horizontal support at 25.50-26.00. The green lines show higher price with long and strong indicators that want to see another higher high in price which will likely target that 25.50-ish area.
But first, a pull back, and the question is where does price pull back to? There are two gaps below that correspond to the moving averages nicely; 19-ish and 20-ish. The 20-day MA crossed above the 50-day MA which is bullish (bearish for markets). Keystone moved back into TZA today and it can easily fall back to the lower targets but considering all the volatility at play, a pattern of large up and large down days in quick succession may become the norm for markets so riding the broad indexes may be like riding a bucking bronco. Projection is higher prices for TZA in the days and weeks ahead. The gap fills at 19 or 20 may provide more attractive entries or areas to add. This information is for education and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
Hello Keystone, I am comparing the TZA & TYP charts at the moment. Does the TYP chart also shows an inverted H&S? I was unable to figure out the left & right shoulder & neckline. Hope you can provide some guidance.
ReplyDeleteThe AAPL chart showed a long white candle yesterday. Is this the start of recovery for this stock or just a temporary bounce?
Thanks for your time.
Cheers, AJ
Hello AJ, yep, TYP is the same set-up, note the right shoulder formed with the gap down move in late April. So head at 8.5, neckline at 11 (use the highest point when the shoulders formed; early March was 11 and late April was 10-ish so use the 11 as the neck line. Of course a regular H&S you would look at the lowest to determine the neckline. You will have to study H&S patterns closely, you should be able to recognize them within seconds of looking at any chart), is 2.5 distance so add that to 11 yields a target of 13.5. Price pulled back from 12.5. The gap fill and 50-day MA is down at 9.5 and there is even a gap donw at 8.7-ish perhaps those gaps will be explored when QE3 occurs. The gap at 9.5-ish would remain in play this week especially if the bullishness continues early week and then the pre-holiday bullishness kicks in for markets. Note the strong S/R at the 13.5 target area from January, there is a gap up there as well at 13.8 that further helps create a magnet area where price would eventually like to travel to.
ReplyDeleteAAPL daily chart is lower lows and lower highs since the April top which is bearish. Positive divergence bounced it but the indicators likely need to see a matching or lower low than 530-ish. The 20-week MA supported price so watch that at 539.
Apple is likely a sick stock for a while moving forward. The Droid Razr Maxx phones are popular, big screen, 4G speed, then you look at AAPl products, tiny phone, tiny screen, 3G, it is as if they fell behind. Sure enough, only a couple days ago, Apple announced a new phone coming with a larger screen. AAPl will probably be in a funk a long time forward and may have seen its best days price-wise. Lots of consolidation in that 350-400 range so it is likely price will eventually move down to take a look at this area as time moves along.
Thank you so much Keystone for the detailed explanation. Learned something new from your blog everyday.
ReplyDeleteCheers, AJ