Saturday, 27 October 2007

PERColator and some TA

This has got to be one of the most overlooked issues in the local market. I wasn't in front of my monitor when I got a call from my broker to tell me that PERC has broken out. Being a technician, my usual questions are never, "Why? What caused it to go up?" By the time I'm satisfied with the answer to that question, it would be too late for me to ride the boat. Anyway, the only questions that matter when I didn't notice this was:

1. What did it break out of?
2. What is the proper buying price?
3. What is the target?
4. What is the cut loss?

Turns out that PERC broke out of one of my least favorite patterns: the rectangle. It's so unpopular with me because you have no idea when this thing will make a move. Add to that, the volume won't follow any textbook definition on how typical volumes should behave in this pattern. You also don't have an idea when it will break out.

After I checked the chart (which was way after I bought this at 12.50), I saw that the resistance of the channel was 11.75, therefore the proper buying price was 12.00. The target was pegged at 14.50. The cut loss would be at 11.50, if I were to follow the concept of role reversals.

Too bad, I didn't see this earlier or I would have been able to act on this immediately. Another stock that came out from deep slumber was TA.

Some said this was a cup w/ handle dating back to 2005. I would agree about the rounding bottom from 2005 up to June of this year. I'm just not so sure about the handle.

Regardless, TA made a major move yesterday to break the resistance of 1.82. This was accompanied by the heaviest volume since July 2005. The target for TA, should it continue moving up, is 2.75 otherwise, be ready to cut your losses at 1.80.

Everyone's looking to cash in on oil...

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