Friday, 30 May 2008

Mallers Rejoice!

It's been some time since I updated my blog and for that I apologize. Unfortunately it was a mix of circumstances which prevented me from posting my studies. Anyway, let's take a look at one of the more resilient local stocks, SMPH.

This index issue has been on a steady downtrend since October 2007. It only started moving sideways this March. What I first noticed when it started moving sideways was the bullish divergence being shown to us by the MACD. This alone told me that something was going to happen in SMPH. Add to that, the sideways movement of SMPH seems like it's trying to form an inverted head & shoulders pattern but that's still a little too early to say since the sideways move is not even over yet.

Assuming that the inverted H&S is what it is, we see the neckline at 8.50, giving us a trigger price of 8.60. Minimum upside target for this points to 9.80. Not bad considering how slow this normally travels.

However, there are some things concerning me for the moment. First of which is the 65-day moving average, which is currently at 8.10. That is also the highest price achieved for today. This proved that for the short-term, the 65MA served as a resistance. Once this is surpassed, the next problem would be the neckline at 8.50. Assuming these are hurdled, the remaining problem would be the 130MA at 9.10, before it should reach its target of 9.80.

Other than this, SMPH seems to be a good candidate to pick up at the moment. Of course, I'd like to be sure that there's significant volume that comes when the neckline is broken before I dive into this.

Saturday, 3 May 2008

Get Ready for a Crash Landing

One of the better success stories as far as discount airlines in the US is concerned has to be Jetblue (Nasdaq:JBLU). It has concentrated its operations mainly on US destinations, but it has also added certain areas like the Carribean, the Bahamas, Bermuda & Mexico. One of the common things dragging the whole airline sector down is the high cost of oil. This sector is definitely bleeding and the end is nowhere in sight.

To see that JBLU is not spared from this common affliction in the industry, all one has to do is take a look at its chart. It reached its all-time high back in 2003 at $31.4345. Its been downhill ever since then. It's been in a slow descent up to the 4th quarter of 2007 and has suddenly dropped in November. It has gone into the consolidation phase since November, creating what looks like a sexy descending triangle, ripe for the picking of short sellers.

It has been consolidating as the MACD will show us as it has been oscillating around the zero line. The price has been dampened and is currently below all three moving averages, which are all in the bearish order.

So what's left for a trader to do? Like a wild animal in the safari hunting its prey, we wait until we see an opening. That opening would be when JBLU breaks the support of $4.39. When it continues its downtrend, we are targetting JBLU to fall to $2.51, giving us a potential return of 42%.

I know I heard the saying that we shouldn't kick anyone when they're down. In business, especially in trading, it's every person for themselves.

Mayday, mayday, JBLU coming in for a crash landing!