An horrific week for the watchlist, which as I said wasn’t very good to start with. I’ll keep it brief as there are some better options this week coming. This week we continue to add stocks to the ever expanding breakout list.
London Stock Exchange (LSE) had a big move, followed by a spinning top (good exit signal for me) and then crashed to a 2 year low. I do not think that this will be a bottom fishing opportunity, the signals point to continued falls in the price, representing a decent shorting position. My prediction of short term gains were way off, and I will stay clear from this stock as it doesn’t look like it likes me.
Equator Exploration (EEL) is currently forming a bull flag. A few players have taken profit after the big drop, and a break either side of this flag represents either a strong buy or sell signal. Flags have been very good indicators lately and I rate them highly. I anticipate a break to the bull side for EEL with 12p (sell some and let some run) and 7p (cover your short) very significant numbers for this stock over the next month.
We did see some profit taking on Monday as predicted for Sefton Resources (SER). Yet another flag formation here. Looking for support at 9.50 for an entry or south break for short cover. This is performing well to short term EMAs and should continue the rise if we see a break of 10.50p for what I would consider a strong entry signal.
The descending wedge on AGA Rangemaster (AGA) continues to get tighter and more significant. It is about to strike a fourth bottom at around 281 which is solid support back to 2004. According to my analysis is should break out this week, so I have included a chart for entry signals short and long.
Petroneft (PTR) performed very well this week, although the entry point was not reached. The setup was triple bottom support and stochastics that looked set to drop to the same range. The stock broke bear side on a flag last week which is why I thought we’d see 27.5p for entry. A mini double bottom at 29p shot the stock up to 36.5p. Momentum continues to lie with this stock and I will wait and see what happens next. PTR has also broken out of an awkward descending wedge very strongly.
Maybe my watchlist wasn’t so bad after all. Empryrean (EME) had a bounce prediction at 46p, I was off by a penny and it bounced at 47p and now lies at 55.44 on Fridays close. I have taken a position in EME based on Fridays performance. The factors influencing my decision to go long are:
- Very strong bull flag breakout and bullish engulfing.
- Based on greatest trading range for the past 22 days.
- Very large volume ahead of me in the mid to high 60s price range – earlier profits.
- Stochastics very strong.
- ADX very strong
- MACD improving.
- Possible insider buying on pending news.
- Strong support at 46p which is just within my stop range.
- High potential to sell intro strength on further moves.
I will adjust price targets accordingly, as this stock could move fast and could easily be in the 60-70 range by Tuesday. I would currently accept 65p on the table here. Stop on a break of support circa 45p.
EMED did break to new highs, but after so many gains from March it is due for a retracement which is probably what we’re seeing now. There are still a lot of holders in late here so I expect some heavy profit taking to commence soon. Should find support at 25p. All indicators point to down for a while but I would expect the momentum to pick up again later with breaks to new highs.
We did see the retrace on RIFT and then some kind of false breakout on Friday. The high remains at 7.5 which is looking very stubborn. More accumulation and indicators point to a breakout but this isn’t a stock I would gamble on short term, given the amount of traders in at a significantly lower price. Buying now will mean buying into profit takers. Hold for a better and clearer entry.
Pure insanity over on Tower Resources (TRP) as the market makers are in clear control of this stock, it is a no win situation until the MM situation has been resolved. This could be the most tremendously huge bull flag ever though – so keep an eye on it. It’s all about spining tops yo.
ReneSOLA (SOLA) broke to new highs as predicted, but has seen some heavy profit taking and selling as new traders continue to trade its volatility. The shine may soon come off this stock as it continues to grow in popularity and predictability. I am looking for support at 526-536 or a break of 765 for entry. That represents the current trading range of the stock.
Despite a fairly bad week across the board, momentum stocks offered relative strength in the very short term. It seems wise to shy away from the top 100 for longs at the moment, as the banks keep dragging everything down, while small caps and volatile oil stocks jump and fall on a weekly basis.
There doesn’t seem to be any safe money at the moment.
Keep an eye on the oil price, there are a lot of stocks that move based on this figure.
The best setups at the moment seem to be wedges and flags.
There are quite a lot of new highs amongst oil, energy and mining. Despite the lack of good signals, entries over the past 2 weeks would have already provided decent gains.
Short airlines and banks, but be wary of a bounce on RBS.
A lot of the bottom fishing plays that were succesful 3 weeks ago, have began to drop to new lows.
The market will be closed again this Monday, so Crystal Balling will be uploaded on Monday night at some point. Some interesting charts and analysis, including a few revisited stocks from previous articles.