stock setup - tag category postings

ABK Ambac Financial also came up in my new scan that I developed yesterday and also showed up in the MarketClub Scan.  As I just indicated in my previous post, the real estate sector is starting to rise from the dead a little bit and so this sector may be worth paying attention to.

I was lucky enough to play ABK Ambac Financial way back in August of 2008 after it had a massive bear market rally from a dollar and change to almost 10 dollars.  I remember it vividly because I was on vacation in Cape Cod up at the Eastham cottages and I remember trying to manage this trade with my laptop using the hotels wireless connection they had in the lobby.  I would go there every morning and then in the afternoons trying to engineer the Ambac trade.  At the time it was consolidating in mid August (see chart full size by clicking on it above) in a somewhat ascending triangle or symmetrical triangle pattern.  But I was stopped out several times and then had to re enter for the eventual move to 9 and change.  I had to be real careful about getting into Ambac because the stock had already had a big move and I was not in the trade right off the bottom, so I was unsure whether it had enough steam to go higher.

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Biotech stocks can be very tricky trades and very unpredictable, but I still thought DVAX was worth a mention as it appears to have a large favorable pattern also known as a cup and handle pattern.  The entire pattern is about 9 months in duration.  That is appealing just based on how long it has been forming. To me, a 9 month cup and handle is a lot more valuable than a 2 month cup and handle chart.

Anyway, it appears that the handle is almost done forming and we could see a big breakout type move out of this pattern, possible in August time frame.  One could also make the case that the handle portion of the DVAX chart is actually a smaller cup and handle pattern itself.  That is an interesting type of symmetry and something I do not see all too often.  It is a nice clear signal that helps to make for a clean move.

I really would not want to see anything below 1.74 on DVAX to keep this entire pattern intact.  If it does move below 1.74, then there could still be a case for an eventual breakout, but just for the sake of being ‘picky’ I think that is the standard that needs to be set here on DVAX.

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BestOnlineTrades recently developed a powerful new computer scan that scans over four thousand five hundred different stocks (Nasdaq and New York Stock Exchange).  It is a superb scan because out of that entire list of 4500 plus stocks it only returned 1/3 of 1% as viable candidates! (.27%)  And it typically seems to only return a maximum of 20 stocks each day.  That is extremely valuable not only because of time savings, but also because of the quality of the candidates it seems to find.  It is a custom scan I developed that uses a combination of two very powerful indicators.  One of them happens to be an indicator that the famous Jake Bernstein likes to use a lot.  But when used in combination with our own custom indicator, the quality factor goes up 5 fold.

PACR Pacer International is one of the stocks that came up in the scan and we are glad that it did, because it looks quite good to these eyes.  The few months to the left of this chart are also significant (not shown on the chart above) because in March PACR did a nose dive into the 1.7 range area, then it rebounded to the 5 level only to fall back where we currently are in this congestion area.

So one could say that the current retracement is a complex double bottom and now we have built sideways cause here for about a month and are perched just under the resistance line close to the mid 2’s.

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Polymet Mining Corp may be getting ready for some sort of uptrend here pretty soon.  If you look at the chart I can conclude a few things already.

• It has held support on its uptrend line since mid March with 2 tests.
• It has completed a consolidation of about 2 months duration.
• It has broken through the resistance as defined by the white downtrend line.

So I think we might see a trickle of an uptrend on this one.  But I have to add that these mining stocks are not for the faint of heart.  In my experience they tend to trade with heavy retracements and cumbersome up trends.  And it makes sense that they trade that way because they are in the mining industry which in generally requires large equipment and investment costs and slow to market type products, especially when they are in the exploration stage.

Apparently Polymet wants to mine copper, nickel and other precious metals precipitate according to their website.  You know, I really wish all mining companies right on their homepage would say in very large text exactly what they are mining for, what their proven and probably reserves are, and when they plan to start production (or if they are producing right now how much).  That way it give the entire investment community an quick 1-2-3 idea of what they are dealing with.  Perhaps I am a bit lazy to dig through all their information myself but it just makes sense to me to provide that right up front especially for mining companies since it is one of the most important factors in their valuation.

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ETFC – Etrade Financial continues to show good signs of a new uptrend based on price structure and trading volume.  They recently reported another loss on July 22nd but CEO indicates that the recent money they raised will be enough to pull them out of their loan loss crisis.  In true market forward looking fashion, the market starts to mark ETFC up well in advance of any full resolution to their loan crisis.

BestOnlineTrades added ETFC to the recommended list this morning very near the open at 1.47.  The stop is set at 1.38 but in this case that may need some fine tuning depending on if or how much of a pullback ETFC initiates this week or next.

The ideal buy price for ETFC was at 1.35.  But here at BestOnlineTrades we were a couple days late in spotting ETFC as a possible candidate.  If a 1.35 entry was taken than it would have allowed ideal stop placement just under that support area as depicted by the red dashed line.

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Both Fifth Third Bancorp FITB and Chemtura CEMJQ have initiated buy signals as of the early morning today and based on my previous post.  Both stocks were trading in congestion ranges similar to what was occurring in the SP500 and other broad market indices.

Today they have spoken and are now part of the BestOnlineTrades Recommended List.

FITB had a really clean and clear looking uptrend since the advance began in early March.  Up until now it has been stuck in a long somewhat sideways trading range and consolidation.  But what was clear was that it was not intending to give back that much ground.  So today we see a breakout from the resistance line.

CEMJQ has basically the same story as FITB.  I think FITB had a cleaner looking uptrend but the structure of both was more or less similar.

So for now I believe the trend is your friend with these too.

I think it is always interesting to do a side by side analysis of the broad market indices and then try to see part of the broad market action in the individual stocks.  I have always found that this helped me to gauge trends either up or down.  The broad market indices are indeed the ‘mother ships’ and the vast majority of stocks tend to follow them.  Of course there are plenty of exceptions at all times, but for the most part this is what I find to be true.

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The chart to the left is the daily chart of JVA – Coffee Holding Company which trades on the AMEX.

Amex stocks can be really spotty stocks in terms of volume, but once in while I have seen some good setups.

There does not appear to be a real setup here as of yet, but I am bringing JVA to your attention because it has shown a few good technical signals that may become more important as time moves on.

For starters you can see clearly from the chart that we have an uptrend that began from the first of March and has progressed steadily to the present.  So as long as price remains above this up trendline we can assume that the uptrend remains intact.

Now there is one thing that I need to clarify that is very important with regard to this chart of JVA.  That first swing high labeled point ‘a’.  For this analysis I need to be sure that it actually hit that high, and that it was not a bad tick (incorrect price data). I have looked at the price on a few different charting programs and they all seem to say that the high on that day was 4.91.  So just be aware that this analysis assumes that the price data on that day is correct.

Why is JVA Worth Keeping on the Watch List?

JVA is worth keeping on the watch list because the price swing I have labeled ‘b’ in the price chart above had a swing high of 4.98 and the volume there was 1.1 million shares.  In comparison to swing ‘a’ labeled on the chart which had a high of 4.91, we saw a 12X increase in volume.  So swing ‘b’ tested swing ‘a’ on 12X greater volume.  That says to me that the 4.91 level will eventually be broken to the upside.  It was dramatically higher demand on that swing point test.

So the possible setup here (which may take a month to materialize) is that the price of JVA trades sideways to flat or somewhat down on a return to the uptrend line drawn in white.  Assuming that JVA will find price support on that white uptrend line, then I would look for JVA to start another rally and eventually attempt a breakout above the 4.91 swing previously mentioned.

So this is more of a setup in waiting right now, as it still has not finished consolidating yet.  It may start doing that more pretty soon as the broad market does some more downside correcting.

A key milestone for JVA will be price getting back above the 4.00 level. If it does that then it may be near a buy signal. But for now it is just watch and wait and be patient to fill in the chart a bit more.

Of course all of this analysis will be invalidated if JVA breaks hard below the white uptrend line.  I am going to try to revisit this one down the road depending on what JVA price does.

I have been watching HAYZ Hayes Lemmerz stock closely today.  This auto supply company trades on the Nasdaq and makes steel and cast aluminum wheels for most of the major auto makers.  Now I probably do not need to tell you anything about how much trouble the auto makers have been in during recent months and last year.  This is widely known and there have been serious questions raised about the viability of their business models.  So here we have HAYZ which makes the wheels for the auto makers on a global scale.  Is demand for cars ever going to pick up?  Or at least will sales decline rates start flattening out?  I don’t have the answers to those questions, but we can only hope the market does.

HAYZ has essentially been priced at bankruptcy a week ago when it was trading at about 3 cents.  This stock is essentially a penny stock now which is pretty astonishing considering their total trailing monthly sales are roughly at 2 billion.  The market capitalization of this company right now is about 15 million.  I have seen plenty of OTC BB and pink sheet stocks with basically no business operations with market caps of about 15 million. Wow. What a beating this stock HAYZ has taken.

But you probably know by now that I try not to dip my fingers too much into the fundamental cookie jar.  I would much rather try the technical take and base most of my judgment on that just to keep my sanity.  Having said that, you should know that earnings call is scheduled for April 6th, 2009 and that date may serve as a catalyst either up or down for HAYZ.

HAYZ has made an enormous run from .03 to 18 in the last couple of weeks.  That is an astounding run and it seems clear that this type of move needs some more consolidation. I am watching it and looking for possible entry points in the .10 to .12 area.  I am going to have to watch it closely to see the nature of the consolidation we get.  In some cases you just get very minor retracements and then continued big moves higher, especially in very oversold fire sale type situations which we seem to be in now.

HAYZ has a few things good going for it right now from a technical perspective. For starters we can see that the 13 day simple moving average is about to cross over above the 50 day simple moving average for the first time in a long time.

Secondly, we see that the recent move in HAYZ has a massive amount of volume accumulation.  Also, in the month and a half previous to this there was already a significant amount of volume accumulation.  I think it is fair to say that the entire float has already been turned over (float is roughly 100 million) in the last month or two.

Lastly, and this is key, we see that HAYZ has tested the .18 price level on a volume swing high that tested a previous swing high on higher volume by a FACTOR of 8.  I am approximating the factor of 8 volume increase.  But I can tell you that it is at least 600% higher.  The two swing highs I am referring to are pointed out in the chart with the orange colored arrows.

When a stock tests a previous swing high on 600 to 800% higher volume it should get your attention because to me it says that the .18 price point will not only be exceeded but exceeded in a big way.  It is saying that we should eventually break through the .18 level and blast higher.

But we have the earnings call on April 6th to contend with before then.  Volume has dropped dramatically since the first up surge, so now I think it is reasonable to expect some sideways drifting and consolidation before April 6th.  Perhaps we might make a shakeout to the .10 area once again and build some sort of sideways pattern.  I am going to watch this one closely.  If it is strong enough, it may break .18 sooner than I think and I may have to enter at .18 or slightly above.  The more preferred strategy is to enter on a low volume retest of one of the price swings we did 4 days ago. 

Definitely a very high risk setup! But for now and at least as of the date of this posting I like the setup!