While many traders are constantly in search of an ally while trading, Ally Financial (ALLY) is not the one you seek at the moment.
This isn't a chart that screams volatility and big moves, but the next leg still appears to be lower here. I'm looking for a test of $20 with a continued move down to $19, testing the February 2015 lows.
The stock has seen a recent rejection of the 50 level on the Relative Strength Index (RSI) and a continued fade in the moving average convergence divergence (MACD).
While we do have a small divergence in the Force Index, that had little positive impact on price action back in July.
We have both the short-term and long-term simple moving averages pushing lower, with price stuck in a bearish stance.
I suspect we'll see a small attempt at a bounce around $20.50, but I don't expect it to hold. Instead, I would look for some pinball action within the channel until we get down to the $20 area. At that point, I would re-examine the bearish thesis.
Consecutive closes over $21.25 would negate the bearish thesis; however, I would still not be bullish. It would put me of a more market neutral view.
I'd be remiss if I didn't mention Netflix (NFLX) here. This chart is all about risk-reward. Really I think the best reward for the risk is a volatility play looking for a bounce all the way back near $110, or a drop down below $85.
We have a bearish flag formation over the past week as the 10-day simple moving average (SMA) is cascading lower. There is a minor bullish divergence in the Force Index, but the rest of the indicators are mired in bearish territory.
A close under $95 without an immediate reversal the next day should send this one lower. Bulls need a close over $98 to really get a chance here. Even then, it will be a fight to break $100.
This has gone from hero to goat before, although it found a way to return to super hero afterwards. If history repeats, then expect that $70 level to be seen. That's a very pessimistic view, but I don't think $85 is unrealistic at all here.