Well, it’s like déjà vu all over again. MSOS opened and sold off immediately, just like yesterday and the day before. Above is a 2-minute chart of MSOS with the SPY in the lower pane for comparison. I’m using a 2-minute chart here because I want to show more detail, but honestly you’d see the same thing on a 5- or even a 10-minute chart, the message doesn’t change.
At the open, both MSOS and the SPY sold off into point A. Nothing surprising there. Then the SPY managed a small bounce before rolling over again and making new lows at point B. That’s where things got interesting. Instead of following the market lower, MSOS held up. Not only did it refuse to make a new low, it actually put in a higher low and began curling higher, threatening to take out minor resistance.
That’s relative strength, folks (on a small scale) and it’s something we simply haven’t seen out of MSOS over the past week. That divergence was enough to get me long for a day trade. I wasn’t expecting fireworks, and I didn’t get them. MSOS only rallied about a dime from my entry, so nothing great, but I’ll take it. In a tape like this, even small signs of strength are worth paying attention to.
Zooming out to the daily chart on the right, the bigger picture if getting a bit oversold. This marks the fourth consecutive lower high, so the intermediate trend is clearly still down. That said, today’s candle left a noticeable bottoming tail after flushing below the $4 level and then reclaiming it. We also came very close to filling the downside gap, which often matters when you’re looking for at least a short-term bounce.
I’m not about to declare this the bottom, more like a bottom. If we can take out today’s high around 4.24, I’ll look to get long for a tradable bounce. My core position remains intact; this would simply be a separate short-term trade.
For now, I’m watching and letting the market show its hand. Let’s see how things unfold.
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