This post will do a forward looking trade plan for MRNA after the recent big swings and also show how this relates to generic models and other big (Interesting) price moves we’ve seen recently.
To understand this analysis it’s best to read through previous posts;
Previous posts (https://www.reddit.com/r/wallstreetbets/comments/ny8u84/all_crashes_are_similar_only_perceptions_change/), (https://www.reddit.com/r/wallstreetbets/comments/ohm7bl/a_practical_template_for_understanding_and/), (https://www.reddit.com/r/wallstreetbets/comments/owht70/downtrends_how_to_deal_with_them/), (https://www.reddit.com/r/wallstreetbets/comments/p08vzd/why_i_think_a_spx_high_soon_is_possible/), (https://www.reddit.com/r/wallstreetbets/comments/p1524y/betting_on_a_spx_crash_constructing_a_higher/), (https://www.reddit.com/r/wallstreetbets/comments/p1twk3/times_to_bear_when_it_makes_sense_to_fade_big/), (https://www.reddit.com/r/wallstreetbets/comments/p2hftp/mrna_the_case_for_a_final_parabolic_spike_and/h8l26lo/?context=3)
I know it’s a lot and you don’t want to read it all, but I don’t want to have a small dick. We’ve all suffered!
Catch up on forecast;
From [Times to bear: When it makes sense to fade big trends. : wallstreetbets (reddit.com)](https://www.reddit.com/r/wallstreetbets/comments/p1twk3/times_to_bear_when_it_makes_sense_to_fade_big/)
Here was the original forecast;
One of the things I’ve found most useful that I’ve covered in my posts is the tendency for markets to reverse off parabolic moves into a 161 level.
>Now I know most of you don’t give a fuck about 161s, but that’s probably because you don’t know about the fucking weird sketchy shit that happens around 161s.
[Why I think a SPX high soon is possible. : wallstreetbets (reddit.com)](https://www.reddit.com/r/wallstreetbets/comments/p08vzd/why_i_think_a_spx_high_soon_is_possible/)
Here’s the move into the high with fibs drawn off the last pullback in MRNA.
The highlighted area would have been a very obvious entry in real time if you were using the phases explained. [ Times to bear: When it makes sense to fade big trends. : wallstreetbets (reddit.com)](https://www.reddit.com/r/wallstreetbets/comments/p1twk3/times_to_bear_when_it_makes_sense_to_fade_big/)
We’re matching various conditions we’d need for the model. Phase 6 is a parabolic move, the rush of euphoria. Phase 7 is the dump when price rejects from the 161 level. Phase 7 is the bull trap and using this model you’d have been filling pending orders on the 161 retest (Market went a tiny bit higher and then dumped hard).
And using this model this was the forecast generated.
Looks a lot alike.
I could “Claim” that, this isn’t actually what I was trying to show in the OP. I think it’s reasonably unlikely the high has been made and the crash has started on this, assuming there’s to be a crash. But I actually meant to show a deeper drop (Bear trap) before the high, which I assumed would happen from 440 and not 500.
I think we’re actually in a dummy crash. The start of the trappy section of the trend. Where there’s a big drop to trap bears and then a parabolic rally to trap bulls – and then there’s a real crash. Typically this is a news loaded part of the move. Prices move fast and volatile and usually there’s headlines flying around to explain these.
If we are in the dummy crash, it should stop by around 38% retracement. And then start to aggressively uptrend. Going parabolic 20% after breaking the high. Then settling into a longer and slower top – a top usually takes a long time to form. We could still be a considerable amount of time away from the top in this.
We may only be in this section of a top (This is a template of common stages I see in tops I use generically, it’s not fitted to this move).
Looking at the small timeframe price action on the break in MRNA it matches quite a lot of the common parts of this topping pattern (I can “Claim” this one. These were moves I was talking about when I made this template. Market breaks off highs).
So all of these are flagging up heavy bearish signals, but where things go devastatingly wrong for bears is when they confuse this move with the start of a big crash and it turns out in a big timeframe perspective we’re actually here.
And that this is going to start to trend back upwards aggressively through the big down day candles and then spike these out by approximately 20 – 25% before making a real top.
When we have sharp pullbacks we can draw 161’s off them and if this is to be the last bear trap before the real crash typically we’re going to see the crash starting somewhere between the 161 and 220 fibs. Over the 220 fib level price is telling you this is not working. This is not a “Right eventually” strategy – small zones are defined in which the probability are more favourable.
Here would be our forecast with that. Interestingly the 161 rule matches the “Above 20%” rule. And with these two independent factors agreeing we’d also still have to see price going parabolic into that level to give us a confirmed short setup. So as price is heading into the 575 – 600 zone we’d have a very well planned trade. Very defined shorting plan.
Here’s where it gets fucky – and this is the only reason I care about telling people, tbh.
Here’s the trade we’ve just seen in MRNA in the SPX. Instability section of 2018 and 2019 into the strong breakout. Hits a 161. Price changes direction. There was news. I know that’s a fact – but this was also exactly on the 161. That’s also a fact. There’s only one way to draw this swing. Only one high, only one low. Hit the 161 of it.
The market would drop about 30% … This is the “Known” typical ratio of the last bear trap.
When that happened, it would have been possible to do the same thing we’ve just done with MRNA. If we think a crash can come, we can make a plan that if it gets into a new high, and then it goes parabolic during that new high, with it going parabolic to about 20 – 25% above the high, then we can short it – only if this is also a 161 extension.
And this gives signals here.
Using this model is not flagging up a lot of random signals to short things because “The stock’s not worth this much” – that should work, but it fucking doesn’t. Circled in blue are places where using this you’re likely to pick up short signals in real time (Some would lose). And in red is all the places people associate shorting with when they think it always loses. We’re not trading those areas.
With that in mind, a combination of the things covered in ‘[When to Bear](https://www.reddit.com/r/wallstreetbets/comments/p1twk3/times_to_bear_when_it_makes_sense_to_fade_big/)’ and ‘[Why I think SPX High](https://www.reddit.com/r/wallstreetbets/comments/p08vzd/why_i_think_a_spx_high_soon_is_possible/)’ there is a strong case built up for shorting as it headed into 4,000 and while it is in the 4,000 – 4,750 sort of range. If it breaks over the 220 fib, this would be reason to exit bear trades. It will be right soon, or it won’t be. It’s not an “Eventually strategy”.
If SPX was to be following this model, the next big swing’s rules would be;
* Drops approximately 50% – 60%
* This spikes out low of big bear trap
Two rules, both have to match. Which they would if price was to fall from the 161.
I want to reiterate, there is usually new news that comes along with big price moves, but to have done all the things required to flag up this area as the area in which you’d be most interested in shorting could all be done during 2020. Like we can with MRNA today.
Updates when MRNA moves a bit. If it crashes it’s really fucking up my example.
* Long MRNA while under 390. Stop loss 330.
* Look for strong trending properties.
* There will be sharp dips, these are good buys.
* Plan to short into 575 – 650 sort of zone, if price action is parabolic into here.
* Expect the news into the high to be positive for the asset, it usually is.
* Often pop comes on bad news.