A few thoughts on CLVS. May not pan out, but this is a bullish scenario.
Reasons the bull scenario could play out from a technical standpoint:
1. Move up to $99 was a clear 5 waves. It looks to have recently completed the ABC correction into a perfect golden pocket 61.8 to 65% retracement.
2. Wave C was an ending diagonal. CLVS has broken out of the diagonal to the upside after a throw over to the downside (a common occurrence in diagonals).
3. Wave 1 up of the new trend has already retraced about 50%. If it gets to the $53-54 range soon, that will make a 61.8% retracement of wave 1 up.
Aggressive traders might be looking to buy the drop to the $53 range hoping the above scenario is correct.
More conservative traders might wait for it to break the high of wave 1 around $63 for confirmation of a new uptrend.
I have no position at this time, but will be watching closely and may enter a position in the future.
Obviously, the bear scenario (which does not really need much chart elaboration) would be that the current downward movement continues to the lower trendline, possibly testing the low $40's in the near future.
Reasons the bull scenario could play out from a technical standpoint:
1. Move up to $99 was a clear 5 waves. It looks to have recently completed the ABC correction into a perfect golden pocket 61.8 to 65% retracement.
2. Wave C was an ending diagonal. CLVS has broken out of the diagonal to the upside after a throw over to the downside (a common occurrence in diagonals).
3. Wave 1 up of the new trend has already retraced about 50%. If it gets to the $53-54 range soon, that will make a 61.8% retracement of wave 1 up.
Aggressive traders might be looking to buy the drop to the $53 range hoping the above scenario is correct.
More conservative traders might wait for it to break the high of wave 1 around $63 for confirmation of a new uptrend.
I have no position at this time, but will be watching closely and may enter a position in the future.
Obviously, the bear scenario (which does not really need much chart elaboration) would be that the current downward movement continues to the lower trendline, possibly testing the low $40's in the near future.
Trade active:
So far the projection is playing out as expected. CLVS has fallen to 53.67 today. I am looking for it to stay above ~$52.50 for the bull thesis to stay intact. If it can bounce off the trend line that it broke through (which it will engage right just above $52.50) then it has a good chance of moving on to put in wave 3. If wave 3 is a 1:1.618 extension of wave 1, we could see CLVS headed to $71+ in the weeks/months ahead. However, if we see CLVS drop below 51.30 or so, then we'll have a wave failure and it will have re-entered the descending channel. At that point I'll be looking to short it. Currently I have no position as I monitor the next steps over the next few days.
So far the projection is playing out as expected. CLVS has fallen to 53.67 today. I am looking for it to stay above ~$52.50 for the bull thesis to stay intact. If it can bounce off the trend line that it broke through (which it will engage right just above $52.50) then it has a good chance of moving on to put in wave 3. If wave 3 is a 1:1.618 extension of wave 1, we could see CLVS headed to $71+ in the weeks/months ahead. However, if we see CLVS drop below 51.30 or so, then we'll have a wave failure and it will have re-entered the descending channel. At that point I'll be looking to short it. Currently I have no position as I monitor the next steps over the next few days.
Trade active:
Today we have closed right at our target for determining the next move in CLVS. CLVS has settled right on the previous upper trend line, so a fall through this would give us a nice initial target of about $46.80's (recent low). On bull side, if CLVS can make a decent bounce here, we can hope this will be the start of wave 3 up which would be confirmed with a break over $63.
Trade active:
As one can see, the bear scenario we described above appears to be playing out. The fall back across the trend line and back into the channel was a good indicator that a short position (buying puts, selling calls or simply shorting the stock) was a good trade from a risk/rewards ratio to enter (at around $52). Unfortunately, I was not able to monitor this today due to work obligations, but I hope some were able to gain something from this idea. I plan to continue to monitor CLVS to see if it gets to $46.80 again as expected now, and to monitor for any signs of a bullish reversal.