I May go Long ABK Ambac or MBI MBIA Tomorrow

abk20090914 mbi20090914

I mentioned before that I was going to watch ABK Ambac like a hawk in the coming weeks.  Well I have not forgotten about it and based on today’s action I am liking what I am seeing in both ABK (Ambac) and MBI (MBIA) price charts.

If ABK can get to 1.90 tomorrow and stay above it going forward then it is a good candidate for a trend trade in my opinion.  MBI should get to 7.05 or higher tomorrow or sometime this week and would also be a good candidate as a trend trade.  I like both the charts, I like the slowly recovering real estate sector putting some type of floor under these stocks as well.

The wild card that could screw up these potential uptrend breakouts would be a broad market collapse.  Till now that has not happened but by end of this week and early next week there still remains risk of that.  But one cannot rule out a breakout happening in these stocks and then the much predicted shakeout later in the week simply brining these stocks back down to support.

If ABK was going to do a longer consolidation I don’t think it would have had the move it had today on advancing volume.  It was right at the pivot point and had to decide either to stay on the uptrend or break down in a more complex consolidation. It chose to stay in the uptrend. Bullish.

MBI has what looks to be a somewhat large ascending triangle chart pattern and also looks bullish when I see the volume within the triangle.  The volume pattern on ABK also looks very bullish to me.

These stocks trade big volume, are highly liquid, are cheap and highly volatile and can move fast.  What more could any trader ask for ?

Assuming I do go long ABK, I may hold it for an extended period which I have not quite defined yet.  Why?  Because the longer term charts look very promising to me and I would rather sit tight and be right for a while rather than just go for a scalp trade.  I may change my mind but for now that is the game plan.

Posted in Market Timing, Online Trading, Stock Setups, Technical Analysis
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