$ES_F $SPY: S&P Futures have been trading in a range between 1100 - 1200 since early August. This range took place after a quick drop, creating what we have noted as a possible bear flag. Today’s move below 1100 could be an early bear flag confirmation, in which case we will begin exiting all bullish positions and entering bearish ones. We need to see one more close below 1100 before we will act. If this bear flag comes to fruition, our target for the S&P emini is 850!
Reed Hastings has done a number on his company, Neftlix. On July 13th the stock hit an all time high of 304.79. Today it is trading at 112.66, a drop of 63% in two and a half months!
Is this the end of the NFLX drop?
Well, we thought it might be as it stabilized at 125. Now that it has broken resistance, we have a bear flag confirmation in tact. The flag pole on this bear flag measures from 210 to 125, a height of 85. Subtract that from the 125 bear flag support level, and the measured move for this price pattern takes NFLX all the way to 40!
That’s a very aggressive situation and we doubt it will happen, but anything is possible in this market. For now, we are bearish until we see how it acts at 100.
We are noting Bear Flags all over the place. Some have broken down quite a bit, some are just breaking down, and others have yet to break down. Let’s take a look at a few examples…
FCX broke bear flag support at 42.50 and has since tanked. The measured move is 27.50, so there may be quite a bit more downside to come.
ACI just broke bear flag support at 18 and fell quite hard during today’s sell off in the Coal sector. This move measures all the way down to the 9-10 range, so ACI may have some scary downside ahead of it.
AA is starting to break down after today’s push below 11.25 bear flag support. The height of this flag pole is about 4, so AA may be headed to 7.25 (at which point we would start selling Naked Puts like crazy).
Last but not least is SPY. A bear flag is in tact, but has yet to break down. Bear flag support resides at around 111.50, and if it breaks down on strong volume the move measures to 89. That would translate to approximately 850 in the S&P 500, and 8,500 in the Dow 30. Scary thought, but anything is possible in this market.
This is by no means a scare tactic blog. We are simply pointing out a few bearish technical patterns, and sharing our thoughts as to what price levels we are watching in these stocks. If these bear flags do reach their measured moves, there will be some amazing buying opportunities in all of the names mentioned in this post.
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