NOW Trade on Nov 19, 2019 09:34 from MarcoG: Tradervue User Stock Trades.

Pull-back play at break and retest of pm level of support on Fresh News!!

Requirements:

Gap : >2.5%
RVOL : >1.5
pmVOL : >50 K
avg Vol: > 1M
Vol @ Day : >500 K
Long Term Chart : Possible Pocket or trend already defined.
Float: >20 M
Short Float: Possibly >40%
Institutional Ownership : Possibly > 100%
History of Gap Follower: Neutral
History of former runner: YES
Major ETF movement and strength: Trending
Catalyst : ER beats

---

Overall Picture

SPY is keeping a certain strength that led the stock to 313 in today's pm session. Though TLT gained in pm too and this let me think that perhaps we could lose some steam today. TICK opened again at a high of 800, important level to take under consideration. I use to track anything TICK does above or below the 500. The overall scenario is pretty bullish still and market has surely enough strength to keep going.

Today's Watchlist

Today I had on the wachtlist: KSS, HD, MDCO, BILI and NOW

KSS: Kohl’s adjusted earnings of 74 cents per share missed the Zacks Consensus Estimate of 85 cents. Additionally, the bottom line declined 24.5% on a year-over-year basis. The downside can be accountable to soft revenues, reduced gross margin and increased SG&A expenses.
KSS was on my watch list due to the ER miss. A nice downtrend kept through the entire pm session that broke down 100SMA @ 50.27. It was on my list with a short bias even if having the 100SMA just above could imply a retest prior failure. I have been back-testing this setup now 2 months or so and I have notice that the rejection of the 100 could be perhaps a playbook trade. I am holding the end of the er season how it will react when volatility will decrease. My idea besides my considerations on the 100SMA was to get short in case of break and retest of 48.49, pm level. Unfortunately the move occurred already in pm thus there was not really more steam for the stock to go and I have definitely followed it for the rejection off the 100SMA. Rejected price broke 48.50 level of support, I had my entry ready @ 48.40 (I've told myself to give it some little range to find a fill). Price pulled just up to 48.39 for 2 times :P loool Cause of that I have cancelled my order that by casualty could have found a fill 10 minutes later on a fast pop and 1 hour later when price finally got to touch the 48.50 and sell! Here I needed a lot of patience. I will work on keeping the orders in case still the trade is valid, today I have got a nice lesson to focus on!!

HD: Home Depot shares are trading lower on Tuesday after the company cut its fiscal year 2019 sales growth forecast and missed third-quarter sales estimates.
The company reported quarterly earnings of $2.53 per share, which beat the analyst consensus estimate of $2.52 by 0.4%. This is a 0.8% increase over earnings of $2.51 per share from the same period last year. Home Depot reported quarterly sales of $27.2 billion, which missed the analyst consensus estimate of $27.53 billion by 1.20%. This is a 3.41% increase over sales of $26.302 billion the same period last year.
HD as you can read by the news released a mixed ER result that has been confirmed by the weird price action marked in pm. Huge gap down with no price support or resistance to take back almost it all up to the open. I was for this reason not short biased while for the first time I have planned a long trade even if the stok was gaping down. Here perhaps the same consideration as per KSS, the stock lost steam and strength to let it keep trading higher once the session opened. 230.50 held perfectly to let the stock make a 2.5 points move. Rejected the high it started his drop to S4 @ 225.91 At that point I have lost interest on the stock, I have considered the move already done.

MDCO: The Medicines Company (MDCO) said on Monday its experimental drug inclisiran lowered bad cholesterol in patients with inherited genetic disorder that causes extremely high cholesterol level in a late-stage trial, the last of a three pivotal 18-month trial. The stock was more than 11.5% higher in late trade. The trial with twice-yearly dosing in patients with familial hypercholesterolemia met all primary and secondary efficacy endpoints, it said, adding inclisiran was also well-tolerated and showed an excellent safety profile to lower low-density lipoprotein cholesterol. MDCO climbed 17% in premarket trading on Tuesday after a Bloomberg report.
I was neutral biased on MDCO too high too soon perhaps. I was right the stock faded beautifully at the open providing an A+ entry @ 09:36 rejecting as textbook 72.50 pm level of support. 5 points move on a stock of 2.5 ATR means that considering my stops at 1/4 of ATR there was on the table a 7:1 pnl position. I didn't enter cause I didn't see it. Was following many stocks today. In addition to my main 5 I had a window with the second day plays, Beta and Trading Ideas stocks for a total of 10. I am sorry with my self to have pushed too much today. In any case I see no other way for me to spot any other setup if I don't start to follow also other stocks rather then only those with a gap. Imagine I don't do this now that I am at the beginning of my career I will never do it again, perhaps better lose some more time now rather then forget the practice cause sat in a comfort profitable zone.

BILI: _ Bilibili (BILI) came out with a quarterly loss of $0.15 per share versus the Zacks Consensus Estimate of a loss of $0.13. This compares to loss of $0.10 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -15.38%. A quarter ago, it was expected that this Chinese video sharing website would post a loss of $0.12 per share when it actually produced a loss of $0.11, delivering a surprise of 8.33%. Bilibili, which belongs to the Zacks Internet - Services industry, posted revenues of $260.08 million for the quarter ended September 2019, surpassing the Zacks Consensus Estimate by 5.03%. This compares to year-ago revenues of $157.08 million._
I was on BILI supported by ER release with a mixed sentiment. I have prepared some of the stocks in my watch list already yesterday in after hours and BILI had a nice gap up in after hours claiming an important level of resistance that if taken could have granted an upper move. It didn't occur I have adapted accordingly. Lost all the gap up the stock opened @ 16.60 to never make a concrete new high, perfect scenario to short. The only detail was the presence of the 200 SMA just below 23 cents from pm low. I have for this reason held and see how it would have reacted to the 200SMA @ 16.04. Price nicely pulled back @ pm low support to reject and break the 200SMA once again and pulled back to it just 2 minutes after offering a great entry for a move down to the 100SMA @ 15.11. Almost a whole point move on a stock with ATR of 0.48. One more good trade backtested here. At the moment the 100 and 200 SMA's rejection/break (accordingly to the main trend) are 2 setups I will include in my trading practice.

Play

NOW

Company Description

Sector: Technology
Industry: Information Technology Services

ServiceNow, Inc. provides enterprise cloud computing solutions that define, structure, manage, and automate services for enterprises worldwide. The company offers information technology (IT) service management applications; and digital workflow products for customer service, human resources, security operations, integrated risk management, and other enterprise departments.

Trade Scenario

**ServiceNow Inc. will replace Celgene Corp. in the S&P 500 index before the open on Thursday, S&P Global said late Monday. Bristol-Myers Squibb Co. is acquiring Celgene in a deal expected to close soon. Lab equipment maker Thermo Fisher Scientific Inc. will join the S&P 100, S&P Global said in the statement.

Trade Variables

Symbol : NOW
Gap : 4.60%
RVOL : 3.5
pmVOL : 387 K
avg Vol: 2.16 M
Vol @ Day : 9.8 M at close
Float: 188 M
Short Float: 4.64%
Institutional Ownership : 98.77% (might have conditioned the selling?)
avg ATR : 8
History of former runner: Yes
History of Gap Follower: Neutral
Long Term Chart : Up-trend since ER release the stock just dropped till 200 to gain back the loss and testing an important level of resistance today that could be taken or rejected.
Major ETF movement and strength: XLK gaping up in pm to a new level of high. Overal strength scenario
pmPATTERN : A 1 min candle that covers 85% of the gap finding consolidation at the top. Failed making 3 new highs found consolidation below last lower high (a bit suspicious action).
Catalyst : Fresh News

Technical Levels

Support:

S/R 277.50 (opened @ price)

S1 276.52

S2 275.67

S3 274.35 /274

S4 273

Resistance:

R/S 277.50

R1 280

R2 285.66

R3 297.46

R4 303.17

Inflection: 275.67

Trade Plan

NOW came with the news of replacing CELG in the S&P index. I have already traded this news in the past and I have recorded it as a weak supporting news. I am short biased in case price would break and retest 275.67 level of support.

Set-up : Down-Trend Continuation on break and retest of inflection. Entering at the pullback.
Side : Short
Size : 17 + 17 + 17 (Entered with 17 shares starter position)
Entry : 275.67
Takes :
Exit: 277.67 (2$ on a 8$ stock)

Trade Analysis:

Now, my plan on NOW (hahahah) had the opportunity to come in play due to the break and retest of S2 level of support.
1) Price got at the open to test 278
2) Price hardly reject 278 down to 276 breaking S1
3) Found support by the end of the 2nd minute and set a new high @ 278.70sh
4) Rejected @ 278.50, got all the way down breaking S1, S2(my entry price), S3 and S4 @ 272 losing his entire ATR in a minute.

This got my attention cause fastest the price is falling and more decisive will be the pull back. I expected actually my entry at this time to be a bit too high considering the drop.

5) It took few seconds for the price to regain S4 and S3. Here I have decided to enter in case also S2 (my entry price would be retested). My stop would have been above open price @ 277.50. My thought was that a stock that has a down trend does not regain all of what lost in 2 minutes.

Intuit:

Once price broke all my level of support and pulled back I have consider the possible rejection after a drop of the whole ATR confirming a certain weakness on the stock. I have promptly accordingly to my plan set a sell order that has been filled almost immediately due to the increased speed price gained at pull back.

Tape reading:

1) I didn't have any particular indication on the tape at the very open on the stock.
2) 09:30:40 200K shares let the price reject the 278 initial buying impulse.

3) 276.53 and .52 caught up some bids and then .63 and then .80 and so on leading price to find support here and trade by the end of the 2nd minute setting a new high @ 278.70sh
4) Big offer @ 279 might have led the rejection and lack of bigger bids didn't support the break. Some accumulation on the offer let buyers definitely lose control but the fight has been extremely wild and volatile as consequence. Some bids popped up during the fall but I would interpret those as liquidity for sellers to dive in, I would not explain then why price didn't find a bounce there while lost his entire ATR in the minute.

5) 272.52 caught a bid that actually held down to 273 lod, filled price got breaking the .75 and found accumulation and bids on the 274.19 that supported the move up to 275. Volatility had calmed now at this stage, the ticks price was marking were now controllable and much more predictable. An offer ! 275.50 at 09:33:47 got light and fill on Level 2. Price held the half dollar @ 277.50 to open next candle rejecting the level. I have here entered the trade. 275.44 caught a bid but price didn't really lose resistance by the .50. 276 was marked and rejected and price basically stayed in a doji candlestick for some seconds. Little accumulation on the bid and boom price spiked 1 dollar with no rejection at all. Stayed on VWAP 3 seconds I have set an hard stop cause I didn't want to be in those kind of spike and hold above open price. Got a little sleepage at the close.

Internalization:

The action was quick and challenging. Those are the kind of scenarios I always used to avoid and always used to miss good, big opportunities, the ones they make your week and perhaps month. I wanted to trade it cause I don't want this to be a limitation for my stocks to trade. Surely I could find better opportunities for me to trade and surely this can result in a fomo trade. But I think it worth the try. Sticking too much to our comfort zone and not trying to leave it could be dangerous. I have done it with precautions today. In the end even if I didn't make a dime out of it I have handle what I have opened. My entry size and stop was controlled accordingly to the 8 ATR. I was on the spot and the volatility didn't accelerate my hearth as used to do in the past. Got the plan on the table I have executed it. Usually especially when on the long side, I use to wait for confirmations, but sometimes a prompt action is needed to don't lose perhaps a good train. Today I might have pushed the limit a bit too far, this will let me be more cautious next time but at least will give me the opportunity to try to trade those high volatility stocks.

Orders:

I don't have any particular considerations on my orders in this trade.

Comments:

I didn't really have a favorite stock to trade today, all looked not so well aligned. I have already traded this news in the past and sincerely I don't think I am gonna trade it again. The result is in the end a lot of chop for nothing. NOW arrived to make the move touching R1 after 11 o'clock breaking pm high @ 278.50. By then all the steam had already run through and 280 could result in a big resistance to break. I didn't trade the pull back @ 278.50 for this reason. It was a good choice considering that the stock never even touched it trading 297.88 and finishing closing @ open price basically.
Good lesson here, my setup could not fit this stock today, and could not fit the way it was trading. Gave it a try to learn something new and handle big ATR wilde volatile stocks something I still keep myself away from.

What I did not like about the trade:
I didn't like the fact that already at 09:34 I was in a trade while I mostly trade continuations play. My exit was just at the high, I had to give it more space? I didn't have the opportunity to close it before and more space would have ment for my plan too much space, I was already 0.22$ above the open price but perhaps 0.22$ on a stock of 8$ ATR is nothing.

What I have liked:
I have liked my contained size and awareness regarding the action. I have liked that I didn't add while I have stopped it cause of a reasonable motivation which was the unconfirmed action but considering 0.22$ above the open price on a stock of 8$ ATR is nothing. Here I like this trade, here I find a point of remark in relation to handling big ATR stocks from open till stop.

Tape gave indications but I don't use those to make main choices. Perhaps I should start to categorize price levels and marking those, for me to have a wider picture of it. Can result difficult to keep the focus on the tape in the long term while maintaining a concentration on the smaller view. I end up to miss previous levels while focusing on the short term. The short term would fit a scalping approach but I am not doing it thus I have to wider the tape up to the main points of control to be able to trade the bigger picture using the Level 2 and Time/Sell. Today my exit according to the tape had to be in case of a break above 278.70/279. This is what I mean!