Well as yet I’ve been unsuccessful in programming the hit and run strategies into prorealtime so I’ll leave that and just relax this weekend instead. I am “all-in” DES at the moment. My profits on that will be dependant on an early morning RNS – if there isn’t one of these, then I can exit – trade – and get in for more or less the same price later in the day. It would take a very good setup (PET) for me to consider this move, as I don’t want to overtrade.
I want to focus on a few interesting plays this week, and less on the traditional pattern spotting and indicator coverage. These are more for the purposes of learning a bit more about what to do when faced with stocks that present large potential gains or large potential losses. The best advice would be to ignore them and find a cleaner set-up, but where’s the fun in that?
Dairy Crest (DCG)
This showed up last week on my ‘Stochastilicious’ filter on prorealtime, but I really wasn’t sure about it so left it. In hindsight I missed out big time, but there are a lot of these bottom reversals happening right now. Incidentally, the first burst was the largest range from the past 9 days and the ADX was above 30 – strong “Hit and Run” strategies.
We’ve seen a bullish few days here – and the indicators point strongly in favour of a continuation – but surely it can’t.. can it? The potential to the upside in the short term is about 508 for me, another 7%. This could come on Monday – the signs will be there very early in trading. These moves have been backed up with some obscene volume – which means that at some point in the next few days there will be some serious profit taking. There wasn’t any news immediately before, or during this rise. I think this will go up Monday/Tuesday, and as the profit taking commences I then expect this to go down quite fast. My initial target is within a few pence of the trend line or resistance line – but with these indicators I might be wrong, and it could smash clean through and out.
Nighthawk Energy (HAWK)
Another quandry for me here. HAWK has been a stock I always look at, but never buy. It’s totally passed me by lately until I consistantly saw it making new highs over the past week. I recall looking at this in late February and naively thinking “this can’t go any higher!”.
An excellent breakout from a good ascending wedge followed.
General rules for profit taking on an ascending wedge are calculating the distance between first two points, and then project that upwards from the break. We’ve had the break move, the consolidation, and the move up – and now we are exactly where the technical trader would take profits. HAWKs moves these past few weeks have been unrelenting.
The ADX is smoking hot, and the long term MACD is looking like a ski ramp. The stochastics have been +80 for a while now, but that’s having little impact on it’s momentum – the signal line for sales doesn’t even drop off that low before crossing again. HAWK is finding some good bounce opportunities off the 40 day ema (redline), and is hugging the fast line tight.
What I don’t like is the gap up and spinning top right at the profit taking level. But all the TA preachers say follow the trend, and for a stock that has made 8 all time high days from the past 9 – then HAWK is a good move. Even once the stochastics pull back a little, I will watch for a turn for entry.
Petrel Resources (PET)
Had this on my watchlists for about 2 weeks after I thought it might have formed a double bottom at some good support and was ready to go up. It didn’t, but I set a price alarm and have watched it move quite well this week.
It’s ticked over the alarm, so I’ve had another look at the prospects of this stock. Despite closing the tiniest fraction under the support/resistance line, PET is probably looking one of the best bets for the coming week. There is no sign yet that Petrel is ready for a strong upward rally or trend reversal – it’s sitting in a sideways channel at the moment, which is more or less where I currently expect it to stay – but it’s looking very rosy for the short term. The volume isn’t high, but there is some good buying pressure.
The last time it moved sharply – there was a lot of volume. People will be watching PET with this in mind, so stepping in ahead of them might allow you to sell into strength as the rest of the traders jump in for a quick buck. The big move last time was provoked by a breakout to the bull side of a short term descending wedge, and while the setup isn’t as clean as last time – there is some positivity about their operations in Iraq which is drawing in a few longer term investors at the moment.
On the technical side, stochastics are favourable, ADX is +30, bulls facing up with bears facing down on the DM, MACD showing good divergence and has crossed over. I am excited about this stock next week, and to me it represents the best play.
Realistically, I would look for a move above 92 for entry, with a short term target of 105. My targets are lower than normal here, as the last major high was less than the previous. I would need to see a cover to about half the distance of that high from now (=105) before a pullback then move to the upside. This stock can be news biased so be careful on that front.
Well I just had to include SOLA because it’s the stock I like to look at most. The intra-day movements are so predictable once you’ve followed it for a while, that you can literally spot the exact trade it turns on and look at 5% profits within half an hour.
Things are hotting up for this stock as oil prices reach new highs, the dual listed American stock reaches new highs, and they are set to announce reports next week after very strong financial updates throughout the year. It’s all about China, and it’s all about solar… and oil.
I’ll be honest and say I don’t have a clue where this is going to go. For the meantime, all I know is that there is resistance at 460 and support at 211 and it has formed a flag. I think this range will continue until results are released, and then I think we might see new high
s. This flag is highly significant, seeing as it follows the WM pattern I covered a few posts ago – meaning that this could go down or up, quite fast, quite soon. Not one to buy or sell right now though. Buy and sell signals depend on whether the price breaks out of the flag on the bull side or the bear side.
I might add more stocks on Sunday night if I have the time.