MELI: Not Yet
A Stock We Love... At the Wrong Price
Not every great setup is a trade today. Some of the most valuable work we do is the homework on names we’re watching but not touching — building the plan now so that when the market finally hands us the edge, we act mechanically instead of emotionally.
MercadoLibre (MELI) is one of those names right now. Here’s exactly what we see, what we’re waiting for, and the specific level that would get us off the sidelines.
The picture: a year-long downtrend that just failed a bounce
MELI has been in a clean, persistent downtrend for a year — from roughly $2,645 last summer to a recent low of $1,495, about a −43% slide. Textbook lower highs and lower lows.
Off that $1,495 low it staged a sharp ~24% bounce to ~$1,850 — and then it failed. Price rolled right back over (our scalper signal flagged the turn at the top), and MELI is now back near ~$1,590, closing weak after a higher open. A rally that gets sold is the signature of a trend that isn’t done yet.
The indicators agree, with a nuance:
Momentum (TTM Squeeze) rolled back negative after the bounce failed — the squeeze has fired (it’s trending, not coiling).
DMI still shows the bears in control, but the intensity is easing — the down-trend strength that spiked in the spring is fading. That’s not a buy signal; it’s a “the selling is getting tired” hint worth tracking.
What we’re watching (the make-or-break levels)
$1,495 — the line in the sand. The recent low. Holds on a retest → the foundation of a possible base. Breaks → fresh lows, with air down toward the ~$1,400 round number.
$1,850 — the bull’s reclaim line. The failed-bounce high. Until MELI is back above it, the trend is still down.
A higher low above $1,495 + a reclaim of $1,850 is what would actually flip this from “falling knife” to “basing.” We’re not there.
The trade we’d want — and why we’re not doing it yet
If we were going to express a view here, it would be selling puts for income — getting paid premium to potentially own a quality name at a much lower price. But two things have to line up before that’s a good sell, not just a sell:
A price we’re comfortable selling under — i.e., a flush into / hold of $1,495, not catching the knife here at $1,590.
Premium that actually pays us for the risk.
And right now, the premium isn’t there. The Aug 21 1400 puts we’re watching are ~$43 today (about a 23 delta) — fine, but not rich enough to compensate for selling into a live downtrend.
Here’s our trigger: in a larger sell-off, those same Aug 21 1400 puts could spike to $70–$80 as volatility expands and price drops toward support. That’s where it gets interesting — richer premium and a better entry near the $1,495 floor at the same time. Sell expensive insurance into the fear, not cheap insurance into a grind.
So we wait. No position. Just a level, a premium target, and a plan.
The decision framework
Why not now: wrong half of the trend (price below the reclaim line), and the premium ($43) doesn’t pay us enough to sell into weakness.
What gets us in: the Aug 21 puts reaching $70–80 on a vol spike — ideally as MELI flushes toward and holds $1,495.
What keeps us out / changes the thesis: a clean break below $1,495 with momentum (let it find a floor first), or — on the other side — a reclaim of $1,850 that turns it into a base (then we’d sell puts on a dip, not a knife).
How we’d structure it: defined-risk on a ~$1,600 stock — spreads or carefully sized short puts below support, never an un-sized naked bet.
The takeaway
Patience is a position. The watchlist is where edges are actually found — you do the homework when there’s no pressure, set the trigger, and then let the market come to you. MELI isn’t a trade today. It’s a plan waiting for a price.
When the Aug 21 puts get to $70–80 and MELI is testing $1,495, you’ll hear from us. Until then, we watch.
— TonyB & TonyR Grow Your Pile
Educational analysis only — not investment advice, a recommendation, or a solicitation to buy or sell any security or option. The levels, premiums, and deltas referenced are observations as of writing and will change with the market. Selling puts carries substantial risk, including assignment and losses well beyond premium received. Size and manage every position to your own account and risk tolerance. Past performance does not guarantee future results.