RVBD opened and held the 32 bid after gapping down miserably on the open. It popped almost two points from 32 and then was dominated by an aggressive seller(s). As RVBD made a pass at the 32 level from where it popped on the Open I got long again. This is one of our favorite technical set ups. But when it broke below 32 I started leaning heavily short. Why?
1) An aggressive seller stepped down from the intraday high back to the 32 level. The seller held all offers and immediately stepped lower when bids dropped. There was no nuance to the selling. Someone had a lot to sell and they were going low offer. This was an aggressive seller to me and may foreshadow more selling to follow.
2) RVBD finally held the offer at/below 32. On the open 32 could not hold the offer. Below 32 was shown on the bids but if you watched the prints and inside market carefully noone was able to hold the offer at/below 32. Now it could.
3) RVBD made a new low. 31.85 had been the low on the open but now a new low had been created to the 70cish area.
RVBD did not drop quickly as I had hoped below the new low. But this is not the only pattern after the new low for an end of the day close at the low intraday pattern. It is possible that a Buy the New Low Program could be turned on the squeeze the shorts below 32 (me) and the shorts below the new low (me) to above 32. And that is what followed. It is also possible that this was a failed breakdown but because of the above that was not as likely.
So I shorted into the squeeze and used 32.35 and 32.50 as my stops. I held. When RVBD traded below 31.70 and was holding I thought I was about to profit handsomely and we would find lower ground quickly. This did not follow. 31.50 is an important technical level on our longer term charts so that was to be considered.
RVBD did not follow through with a deeper downmove but I am content with my lean short for the reasons above. Tomorrow we will watch below 31.50 as a short, above 32, above 32.35 and above 32.50 as possible longs.
Bella
