Houston American Energy Corporation May Do a Reversal This Week

 HUSA Houston American Energy Corporation may get some type of upside reversal going this week based on the reversal hammer I see and the test of recent support area.

This stock came up in a scan from my scanning software.  I was trying to make a formula that finds reversal hammers with long lower candlestick shadows and a hammer body size that is significantly smaller than the entire days range.  Needless to say it was quite a pain at first to work this formula into the software but I think I got it working now and it seems to be churning out some interesting setups such as this one.

I think reversal hammers are a lot more reliable after there has been enough significant choppy price decline before the hammer occurs.  In the case of HUSA, I see that we so far only had 2 big down days that were very fast, so it may make this hammer reversal less reliable and there could actually still be downside continuation this week.

However if HUSA can manage to stay above 13.5 on Monday (4/12/2010), then it could be that some type of reversal could get going into Tuesday to Friday of this week.

If it does I am thinking  15.5 to 16 could be a target.

Incidentally I really need to do this scan at the end of every day to see what it churns out as this is one of my favorite reversal signals on the candlestick charts.

HUSA

It only seems to churn out a small handful per day based on about 7000 stocks.  Most of the ones it churns out are not so great.  But imagine if maybe once or twice every couple of weeks it spits out ones similar to HUSA.  That could mean some pretty high probability 5 to 10% moves.

Anyway I am going to have to see how this scan performs over time and the types of setups it reveals.  All I am really looking for is a 2 to 7% move after one of these.  Now imagine if that could be done fairly consistently.  But it really comes down to the quality of the setups.  These reversal hammers can show up at any point in a price advance or decline and it is the rare few that offer enough good variables to make them actionable.

It may be worth it to develop an entire separate strategy based on these reversals alone.

I really don’t think anything conclusive develops on HUSA until Tuesday and onwards of this week.  A lot of times what I have seen happen is a brief price move above the close of the hammer and a small rally but then a reversal by the end of the day in a small range bar.  But then thereafter the real upwards rally.

HUSA is going to be interesting to watch this week.

Posted in Stock Setups
Tags:

Leave a Reply

Your email address will not be published. Required fields are marked *

*

s2Member®