Stephen is one of the top-performing SpikeTrade Members. In this post he shares a trading idea with the group - AE
This setup is ringing the bell for me. I call it my BIG MAC play, or more specifically: BIG MAC-Summer, 5/5, C&H . Summer refers to the identified market season as indicated by the weekly MACDH. 5/5 indicates:
1 - bullish S&P chart
2 - bullish VIX
3 - weekly MACDH divergence
4 - MACD lines rising from below zero
5 - EMA rising
C&H refers to Cup & Handle, a Classical chart pattern.
There is good support at 13.80, for a low risk – big potential reward trade.
GLTA,
Stephen M.
"C&H, etc. refers to whatever Classical chart pattern is present." --i.e. cup and handle, double bottom, double top, head and shoulders, ascending or descending wedge, engulfing bullish bar, pennant or flag, ascending, descending and continuation triangles.
ReplyDeleteI think that when these chart patterns are coupled with the other "Elderesque" type elements,a person can put on a confident trade that has a higher probability of success. I'm mindful however, though not as likely, these patterns can still fail and pound me with humility :)
Steve M
Hi Steve,
ReplyDeleteI am not quite seeing it...It would be sweet if it rallied back to 19...From my charting it looks like it is under a lot of cross currents...
I'll be watching it...
Good Trading,
Eric
Ener is one of the stock I’m monitoring. Its weekly divergence has been accomplished 18 weeks ago and ENER continues to go down with weakly peaks above the EMA13w lower each time. The third one occurred last week.
ReplyDeleteSo, Stephen, I guess that you are talking about a quick trade with a target around 15.50. Which price would you buy it? A stop at 13.80, a price at 14.48 (close yesterday) and a target at 15.50 give a 1.5 reward/lose ratio and 1.9 at 14.38 market price at 10h52 ET.
Greetings,
ReplyDeleteI am unfamiliar with the "cup and handle" pattern, or perhaps I know it by another name (English is not my first language), and I didn't get it just by looking at the chart. Could somebody please explain this pattern to me? Thank you in advance!
Regards,
Tito
Didier,
ReplyDeleteI'm looking for a little bigger pop than what you described. Things have changed a bit now however, compliments of Piper with their suspicious downgrade, but this chart also has a consolidation triangle. The lower border is just under the gap on 7/24 @ 13.75. If the pps can stabilize/reverse near here then I would consider a entry in this range with a stop at 13.24 and a target at 18 (the depth of the cup.) Obviously this would involve a squeeze of the shorts which comprise 30% of the float.
I'm suspicious that the downgrade is a facilitated act of desperation to get out. Ener reports Aug. 27 and they know it's going to be a surprise; inventory sold out and costs contained, major new orders for immediate delivery, Federal rebate program and AE stimulus money kicking in. SOLR, SPWRA. CSIQ and FSLR already represented these improved conditions. So, I'm looking for a false break reversal from these oversold conditions and if I get that stabilization, I'll know that piper & co. are on the run and that very likely, the current - below book value share price - will turn and burn right through the down trend line and snap right up to the 100dema and beyond. My trade would involve a 3.7% risk with an 8.3 risk ratio.
Hope all is going well,
Steve
Didier,
ReplyDeleteanother thing I forgot to mention. The big MACDH peak is interesting. It formed due to an "upgrade" with a target price of 28 by JPM a few weeks ago. Volume was big. Now a downgrade with a target of 9, and a subsequent dip on low volume, forming a bullish divergence on the 60 min. Who's right? To me the volume says a lot. The "big MAC"(MACDH PEAK)will eventually pull prices back up to challenge the break out scenerio discussed.
BTW, I'm in right here 13.73 at 9:00am
Steve
Hey Steve,
ReplyDeleteGood Luck! For my entry I'd like to see it break down to support near 12.80...not sure that will happen though since the volume is low it might just be hanging up...but it looks like its going to be a bottom fisher...if not then buy it on the rise as it breaks $15...
Good Trading,
Eric F
...."then buy it on the rise as it breaks $15"...
ReplyDeleteNot a bad option - stop buying into the upside break out. A Triple Screen trade of a Fallen Angel.
Thanks Eric,
Steve M
Thank you Steve for your comments. I'm going to re-evaluate this stock
ReplyDeleteIt seems to be getting a nice bid this morning. Interestly, there's quite a bit of activity in the Aug. calls - which expire before earnings--hmm?
ReplyDeleteHere are the stacked up volume/price surge impulses I'm looking for to spur both buying and especially short covering:
1-bounce off lower uptrend line (today)
2-Close above fast and slow EMA's
3-Handle trend line break
4-50DEMA break
5-consolidation triangle upper trend line break.
I will tighten stop @ the 50DEMA in case of failure, but if it breaks, I think it easily runs to the 100DEMA @ 16.81.
Cheers!
Steve
Steve,
ReplyDeleteI agree with your triggers except the triangle since I’m not comfortable with the graphic patterns (cup and handles, head and shoulders, etc).
I’m dubious. Today, ENER went back down as well as its sisters STP, ESLR, FSLR. ENER did it today on a very low volume (57% lower than yesterday) and with a 0.47 of the 21 days volume EMA. MACD Weekly and daily continues to go down and IS is red.
11.83 is the last multi years low (July 10th). Eric suggests 12.80 (july 23rd). Wait and see.
Have a nice evening.
Didier,
ReplyDeleteI always appreciate the detail that you provide with your assesments.
Of all the things that I like about this play, the 2 most influential elements are the weekly descending wedge (easy to see if you compress the weekly chart) and the triangle on the daily. This triangle WILL reslolve any day now either up or down and when it does it will likely be a substantial move. If it's up, it will induce the mother of all squeezes. If down, then obviously it will disappoint longs. I like it's resiliance when it was under pressure yesterday and it's strength - relative to it's peers - today, that's a good sign.
I appreciate your imput. It keeps my "false hope" leashed.
Have a great day,
Steve
Steve and Didier,
ReplyDeleteVery interesting conversation. I am taking a look at the weekly and see that this company has not participated in the "March Madness" rally...it looks like it is still trying to find itself as it has stabbed higher 65% off the later March bottom...only to come back and retest...a strong buy signal would certainly be in the cards if it retested or tried to retest the low...
On the daily it looks as if it is indeed in a squeeze- I am not sure how Kerry measures a squeeze- I am just doing it by eye...a break is coming- I just don't have a crystall ball to tell me which way...If it does break lower then you may want to have "loose" enough stops that allows you to hold through a false downside breakout...because once this thing unleashes it looks like it can run fast...and a potential double may be in the works for a longer term trade...I don't know any fundamentals though and I am just strictly looking at the chart..."Who Knows?" said the blind man. Good luck in your decision.
Good Trading,
Eric F
Eric,
ReplyDeleteExactly my fear - a retest of the low with a false break and subsequent reversal. My stop is way too tight to ride that far down in hopes of a reversal. LDK missed badly which is putting pressure on the sector. We'll see how it hangs in there. The shorts have got to be skiddish here, as their memory is clear and crisp when they got caught short thru last year's earnings surprise. Because of that, I think they'll be quick to split once they realize things are not as bad as the "under book valued" stock price indicates. If it can absorb today's LDK shock, then I think it could run. If it can't, I'm going to get out and chalk it up to "woulda, coulda, shoulda."
So far, so good....
Thanks Eric,
Steve
This sector is very weak today. The sun certainly isn't shining on the Chinese stocks. The thin film co's (First Solar and ENER) might escape but if we roll into a negative funk, even good news will get sold.
ReplyDeleteMy ability to WILL a stock to profitability is inept. Therefore I must interpret the signals that this market is giving objectively and either embrace the stock or run from it. Right now, if it doesn't recover 13.70+ today then it looks as if it will breakdown out of both it's triangle and the neckline of a H&S that has formed both on the daily and 30min charts. Today is make or break...
Steve M.
Eric,
ReplyDeleteLooks like you were right on with your analysis of this stock. It will gap open today, forming an island reversal on the daily. That could give it legs. This following a retest of the 12.80 area. Trina and SOLF both beat with good guidance. Maybe this sector shine?
Steve
Hey Steve,
ReplyDeleteI am still bottom fishing here...I will only be correct if this things regains itself and goes back to $19...
Hopefully with a few of us in it...
What is your thoughts on the fundamentals and earnings...
Good Trading,
Eric F
Eric,
ReplyDeleteObviously a rough 2nd QTR is priced in, however, I like the fact that they made tough decisions early on (unlike LDK)to defend against the pressures of this tough economy. They sold Cobysys and acquired SIT without too many details being explained. then a Berkshire Hathaway co. signed an agreement with them. these are all positive posturing steps for a ramp in earnings in the near future.
All in all I think they'll surprise on the upside - due to they're cost cutting and will give good forward guidance - due to the stimulus $, battery royalties and efficiency improvments with their new machinas. They haven't pre-warned.....that's bullish.
Good luck,
Steve
Today ENER has followed the pattern of the market opening lower and closing higher. 0.9% has been made during the last ten minutes on high volumes, a phenomenon which happened for several stocks I follow. I can’t conclude anything from this hammer shape.
ReplyDeleteFrom there, I’m trying to think of the triggers than could lead me to buy a bunch of shares. In case it continues to go down, a classic could be low at 11.83 or lower and a rejection with volumes higher than the average.
However, time goes by and the 27th is approaching. Big moves could occur whether some players anticipate results. In addition, I don’t know the attitude the market usually has when there is a merger. I just know that the management challenges involved could be costly before the positive effects appear.
Have a nice evening.