EPEX Edge Petroleum Breaks Out with a Sign of Strength

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I had mentioned EPEX a few other times casually because I though it had some good potential based on an important volume swing test in early June and early May 2009.

When I first started writing about EPEX I was intrigued by the substantial high volume swing test that occurred on June 1st.  That was a very important clue as to the behavior of this stock because it was telling me that we would have a good chance of revisiting those levels.

But when I first mentioned it on July 28th, 2009, the price was languishing in a somewhat choppy confusing price pattern that seemed like it was going nowhere.  Despite the confusing price action there were still well defined resistance lines and support lines that contained price and gave good parameters to work with.

At about mid August EPEX tried to get a breakout going and briefly held above the down trend force and then as recently as Thursday of last week price broke back down under the resistance line and appeared as if a total failure was about to occur. This was not to be the case as EPEX bounced back up on Friday with a nice surge and volume and then today triggered at .50 or higher to initiate an approximate 37% move from Friday’s close.

I still think EPEX has a decent shot at .70 to .85 cents, but the entry was at .50, not where it is now…

EPEX serves as a great example of a stock that gives an early hint of a high volume swing test, then goes into a long consolidation but fails to break out support and a triple bottom, and then tries to breakout the other side in a reversal.

If a stock is unable to break out the previous highs, then it will try to break down through the previous lows, and if it cannot break the previous lows, then it will try to break out the previous highs again. 

Posted in Market Timing, Stock Setups
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2 comments on “EPEX Edge Petroleum Breaks Out with a Sign of Strength
  1. Emily says:

    I’m still learning about reading charts, but I’ve been back-and-forth about this company, and have decided to just sit still. Bought at $0.46 a share about a months ago, and have heard pros and cons, about it once being a huge company, and now how it’s debt-to-earnings could easily lead it into bankruptcy. Banks have been giving it breaks since at least February-March, and the stock was worth almost nothing then, so I’m just wondering why they keep giving it a chance. Plus I’m wondering why it’s paid off some debts recently if it were to indeed go BK. Don’t really know what to think, but will keep sitting tight and taking the risk. How do you feel about this company overall?

  2. Tom Tom says:

    Hello Emily thank you for your comment.

    As you probably already know I like to look for setups based almost 100% based on technical analysis factors. I do pay attention to a few fundamental factors but they are definitely not the main criteria I am looking at. The reason for this is that I believe most of the fundamental factors are already built into the price. In addition any future fundamental factors can start to become built into the price because in most cases someone already knows something ahead of time and it starts to get reflected into the price.

    I realize you are still learning chart reading and that is great.

    I can’t speak to the fundamental points you make about EPEX, but I can say that yes EPEX is very speculative and the risk factors you point out are valid. This stock did start rising from a base of about .10 cents and it could easily move back to that point on bad news. Indeed many cheap stocks I have see that have risen from a very low starting point have traveled all the way back to where they started.

    When I mentioned EPEX I was looking for a breakout above the .50 level. It accomplished that and 1% to 20% returns where possible there. Now it has broken back down (it was not supposed to do that) and has come back inside its trading range. This is not good and may warn it will continue the down trend. Although the general market is still continuing higher, one should be extra careful at this time because we are ripe and overdue for a correction. If that happens it may cause EPEX to continue down even more.

    Remember that one of the greatest things that can happen with investing and trading is to be able to get out of a stock at or very near the price at which you bought. So then you basically have a break even situation.

    Never forget that there is always another stock and always another setup. Be careful of stocks that do not perform in a timely and productive manner for you.

    If I owned EPEX I would definitely not hold it if breaks below .38 cents. There is an outside chance it could pop back up to .80 eventually, but it needs to start turning upwards very soon to convince me of that.

    Sorry I can’t provide insight on the fundamental aspects. But still wanted to give you my take!

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