Wednesday, 27 January 2010

Gotta Get Up to Get DOWn

I guess our days of being bullish have been short lived. Although there were bullish signs for the DJIA to push itself to higher levels, it just didn't seem like it was possible as there were some things missing.

The first thing that was missing was the pick up in volume as the index was moving higher. This alone made the rise suspect. Even the breakout from the supposed inverted head and shoulders formation was dubious as there was no pick up in volume on the breakout. Some called this the Goldman Sachs rally. But that's another story altogether.

As seen on the chart, the uptrend support since March 2009 has already been broken a few days ago by the DJIA. Not only did it break through the support, it also broke the 50-day moving average at 10450 and is now currently being supported by the 100-day moving average at 10116. If I were to follow where the DJIA could go to, the index could possibly fall to 9337. By that time, even the 200-day moving average would be broken and things will definitely turn bearish.

However, I think that this has been the correction that many people have long been looking for so that we may now proceed to the next wave of the bull run. In short, we need this correction to go higher. So we should expect the MACD to really look bad when this happens. We shouldn't panic over it. But that's not to say that we won't do anything while this is happening. Lighten your positions. If possible, stay liquid until things turn around.

It's time to stay on the sidelines.

Tuesday, 29 September 2009

LOTO Fever

Who wants to try their luck and see if they can score a jackpot every now and then? Everybody who wants money, that's who. But we're not talking about people who normally lines up in the nearest outlet for a chance to win an ever growing prize.

We're talking about traders like us. When we buy into any stock, don't we try our luck and see if it gives us a jackpot? But there are many who don't know the difference of trying their luck against pushing their luck. So to avoid pushing your luck, let's try something we normally don't play.

LOTO has made a big run most recently and retraced a good chunk of that. When that happened, I thought this one is finished as soon as it just started. Until today...

Since Thursday last week, it has been following a textbook definition of a flag. 2 day pole, 2 days of consolidation, diminishing volume. Sounds like a flag, feels like a flag, smells like a flag. So now what do we do?

Since 16.50 has been serving as a resistance, we wait until 16.75 is hit and we go in. 18.00 is the minimum target being shown to us in this formation. Should this pattern not follow as expected, and we were already into it, 16.00 is the cut loss for this.

So who wants to try and see if there's gonna be a payday within 3 days?

Tuesday, 1 September 2009

Singing to a New TUNA

(Original post can be found in Absolute Traders)

I noticed last week that there were two issues that were moving up out of the blue. The first one was PIP, which we won't talk about. The second, is TUNA.

What I remember from this stock since it's listing is that it has been on the downtrend. Even if its fundamentals are telling you a different story, the price performance is something hard to ignore. Because of that, TUNA has long been relegated to the back of my priority list...until now.

Being a lover of flags, TUNA caught my eye when this has moved for 2 days with a total of 20 centavos. This alone made me sense that a possible pole is in the making. For the next two trading days, it consolidated near 1.78. By this time, I have somehow confirmed that it is doing a flag.

That being the case, I see that the resistance of TUNA is now at 1.78. A break of this at 1.80 can be considered a buy with a target of 1.98. If it turns out to be a wrong move, a cut loss at 1.76 is called for.

But wait! This isn't the only play available in TUNA.

On the longer term, it seems that TUNA is in the midst of a reversal pattern. Whether it is doing a triple bottom or a double bottom, it doesn't matter as both are pointing in the same direction: UP.

If we want to play TUNA for the longer term, we are now looking at the resistance of 1.90. Should this be broken, and I think it will when the target of the flag is about to be reached, volume should come in at 1.92. The new target for this will now be 2.65, giving us a probable 38% return.

So after all other popular issues have already made their move, TUNA is a late bloomer that deserves a second look.

Friday, 22 May 2009

FPH Breaks a Cup

(the original post could be found in Absolute Traders)

Another issue has caught our attention by forming a major reversal pattern.

FPH has been going sideways since June 2008 and has formed what we think is a cup & handle.  The cup started on August 2008 and ended March of this year.  Right after that, a symmetrical triangle, which serves as the handle, also formed.  Yesterday happened to be the day of the breakout.  Based on our estimates, 26.50 was the right time to buy.  Should this surpass the resistance of 30.50, we could probably see this reach the minimum target of 44.25.

The moving averages have already turned bullish with the 65-day moving average above the 130 & 260MA.  At the same time, the MACD has been oscillating above the zero line, giving us the idea that FPH is really bullish.

Should there be some correction for FPH, it might be good to pick this up around 26.50.  Happy bargain hunting!

Recommendation: Buy on correction
Resistance: 30.50
Target: 44.50
Cut loss: 23.50

Wednesday, 20 May 2009

EDC's Worth the Wait

(the original post can also be found at Absolute Traders' website)

There’s still some waiting that needs to be done for EDC but I believe it’s just gearing up for some momentum.

After falling from its high back in October 2007, EDC has rebounded from its lowest point in December 2008, and has reached a high of 4.40 just this April. It is currently continuing its consolidation but this could be a big kick when the momentum shifts.

I’m assuming that the pattern this stock is trying to form is a cup and handle. Assuming that 4.40 is our resistance, and 1.82 is lowest point, we project our difference to 4.40 and we get 6.98 as our minimum target. But since the stock doesn’t move by 2 centavos at that price, I’m readjusting our target to 6.95, not so bad considering that that’s nearly 60% in potential returns.

Our MACD confirms the bullish momentum but has waned from its high. When this stock breaks out, you can bet that the MACD will push itself to higher levels.

Anyone for a cup of tea?

Recommendation: Buy on breakout
Resistance: 4.40
Trigger buy: 4.45
Target: 6.95
Cut loss: 4.35