The Dramatic Death of Momentum

For those who have been fighting it for quarters on end, the weakness in GPRO SHAK TWTR should be an exclamation point about the necessary trait of humility in all forms of speculation. Just when it seems like corrective momentum names simply cannot go any lower, they continue to push down and trap in more long yet. 

With this in mind, a name like Ambarella, another former momentum darling, may actually just be getting started with a fresh leg lower. On the weekly chart, below, for example, consider the recent consolidation since last October, and how many traders assumed the stock was bottoming.

But in assessing the weekly chart pattern, the consolidation could just as easily, and in fact is more likely to be, a bearish continuation pattern, with the presumption of a move back down to $33 within shot, given the sheer size of the prior downtrend and the size of the consolidation. 

Having said that, the broad market in the short-term is still trying to muster a modest bounce from oversold conditions. We covered up some shorts inside Market Chess Subscription Services. 

However, it is looking more and more like each and any bounce the market sees will be met with interested sellers who have had the epiphany that momentum cuts both ways, and it has cut against them harder than they expected.