Online Trading

ETFC ETrade Rising back from the Dead

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Etrade Financial looks like it wants to come alive again.  If ETFC can get a move going above 1.52 and above that short term white down trendline I think we may see ETFC make a run for the 2.00 range later on this month.  I have been going back and forth on ETFC.  I indicated in my previous article that ETFC was not worthy of consideration anymore because it broke out of pattern on heavy volume and that the setup if any was confusing.

But if you look at the mini chart above you can see that ETFC has clearly held support of the 1.34 area, and that level of support is pretty solid.  So we bounce off that level today and are making a slow motion run back to the top of the range.  But ETFC still needs to overcome the shorter term resistance and get a move going above 1.52 for me to become even more encouraged.

If ETFC was to enter a more bearish scenario then ‘they’ should have been able to take 1.34 out readily the last few days, but ‘they’ didn’t … So now we are back topside again and maybe a new setup is developing here.

I have no clue how ETFC will close today and whether the FOMC news today will either ruin or enhance the run today.  A lot of times when I have seen the market up big ahead of the FOMC it seems like it has usually been a case of buy the rumor and then sell the news.  So I would not be at all surprised to the the broad market only up a couple points by end of day.

But let’s see how well ETFC can hold up today. 

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ETFC Etrade Breaks Down and Cannot Get a Rally Going

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Have you noticed how a lot of financial talk shows or internet sites seem to never mention the stocks or setups that turn sour?  Or maybe they only talk about the winners or how much percent they are up for the month or year.  I actually think it is a good idea to revisit setups that failed and then to try to figure out what went wrong or why it did not work out.  If we don’t learn from the failures then how are we to learn about what makes a good setup versus a bad one ?

Etrade ETFC is a failure.  I don’t mean their business is a failure.  The setup I initially talked about is.  Etrade Financial broke down today on pretty heavy volume and this on the same day the rest of the market was up very strongly.  I don’t like to see a break down like this in light of such market strength today, and also to see it with such heavy volume.

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EPEX Edge Petroleum coming close to a Decision Point

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This is an important alert on EPEX.  I did a post before on EPEX Edge Petroleum.  You can see the previous post under the related posts section down below.  It looks to me now that EPEX is coming close to a decision point and I cannot say for sure whether it will be up or down but the probabilities say it is going to be an upside breakout.

There are two significant swings on EPEX that make this analysis worthy.  You can see them more clearly if you click on the chart above.  They stand out like a sore thumb.  But the key point to be made about those two price swings is that the second one had volume that was substantially larger than the first one.  That is an important clue about what the future direction of the stock price will be upon a breakout from this pattern.

My analysis shows that the direction will be UP.  However we will not really know until it happens… that is just the way these markets work, let them give you the signal and then go with the flow.  As of now EPEX is still constrained within this tight range.

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It is time to put ABK Ambac Financial on the Radar Again

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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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Quick Follow up on US Steel X

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US Steel was up almost 9% today after my mention of it this past weekend.  I talked about how it appears to have a large head and shoulders bottoming formation.  Today’s action makes it look like the breakout from this pattern is in force.

The volume was very robust today especially for the first Monday in August.  This large head and shoulders bottoming formation has some rough targets. 

I calculate about 20 points between the low of the head portion of the pattern and the neckline of the pattern.  So the minimum measurement rule here suggests that US Steel could get to about 60.  Assuming this is the real breakout this week, then one thing to watch for is the retracement back to the neckline.  That may serve as a second opportunity to ride this new uptrend.

The size of this pattern is significant in that it is almost 1 full year long.  That is a lot of cause for a sustained move.  Head and shoulders bottoming patterns tend to be quite reliable in my experience.  They are not perfect patterns, but they do tend to give very reliable signals.

It should come as no surprises that US Steel got this move going in light of the fact that the US Dollar Index has broken down again in the most recent two days.  I talked about the US Dollar Index several other times and have said repeatedly that it is at a crucial juncture and at critical support.  Now it has elected to break that critical support.

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DVAX Dynavax Technologies possible large Cup and Handle

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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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Trend should now be up for UNG Natural Gas ETF

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ung20090803 After a violent retesting action in the UNG ETF I believe that UNG has now bottomed and should embark on an eventual retest of the 17.55 level.

The recent break to new lows was a head fake in my opinion and we should now see a renewed bullish uptrend gain some footing.  The daily action showed that the most recent retest had to hold to keep any chance of a more significant reversal intact.

The monthly price bar chart of the UNG ETF as shown in the chart to the left tells us that the July monthly price bar showed some signs of demand in that we had a mid range close and test of the previous monthly swing 3 months previous to it.  That initial demand in the July monthly swing is spilling over to August now and I think it will continue.  Certainly there will still be volatility, but the trend will be up as I see it.

There also appears to be an island bottom formation on the UNG ETF that was confirmed as a result of today’s action and gap up.  Island bottom formations are very rare in the commodity futures market.  I don’t believe we had an island bottom on the natural gas futures contract, but I am still going to give merit to the fact that we have an island bottom on the UNG ETF.  It gives me a good dose of evidence that this is the final bottom for UNG.

Even a modest upward retracement of the UNG ETF bear market that it had could see it eventually doing a 50% move from these levels.

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CNXT Conexant Systems Powers Higher after Alert

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I talked about CNXT last Friday in the early afternoon and said “I would say that as long as it can hold 1.47 and keep its composure, I believe it could be setting up for another attack of that blue resistance line and a breakout type move”.

Today CNXT did not waste any time and shot up almost 29% from Friday’s close.  The pattern on CNXT was quite powerful.  It has a large saucer type formation after the huge sign of strength that occurred in mid-April.  Clearly CNXT had a lot of sideways cause (potential energy) building for about 3 months.

The clue was the big volume attempt at a breakout 3 days ago and then the retracement back down to support.  I said on Friday that it needed to hold 1.47 support other wise the scenario would be in doubt.  It did hold 1.47, so no complaints there.

Clearly the market continues to be in an active state right now with plenty of break out type opportunities.  Interesting that they are occurring this time of year now.  Perhaps the current advance in the broad market will continue into September before any more significant correction occurs?  That needs to be studied more closely.

But for now there continue to be breakout type opportunities and CNXT is just another example of one.

Honestly I would have to rate this CNXT breakout near the top of my list as far as quality, advance notice and overall setup type.  It was a clean setup and the probabilities here were very favorable.  Setups like this do not occur too frequently.

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ETFC Etrade Financial in a Bullish Stance

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I continue to like ETFC Etrade Financial here.  I like the way it pushed into the gap on 20 million extra shares (illustrated by the two yellow arrows).  To me that is a bullish sign.  It has also managed to break through the bottom blue line which represents the bottom portion of this trading range which should act as support going forward.

The fact that price was able to break back into this trading range is very bullish indeed.  After it broke through and down the blue support line near the 1.35 level, the price of ETFC was supposed to continue falling and continue making bear market lows under 1 dollar.  But the bears could not accomplish that and price recovered back inside the trading range.  Now it has been flat lining sideways.

If ETFC can hold these levels with a worst case of a quick retest of the blue support line at 1.35, it could lead to a large run near the 1.95 level which would be an ideal exit point.

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US Steel X Almost done creating Inverse Head and Shoulders Pattern

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It really is quite amazing. I feel like a kid in a candy store.  There are so many long side setups now that it is hard not to find one out there.  It is a result of the strong bullish persistence in the broad market as it rebounds out of the depths of its bear … Read more