Holiday Scan

Here are some charts that caught my eye during a scan through the finviz.com last evening.  A couple of the solars caught my eye, but I'm not quite confident oil has bottomed just yet so we'll have to see how that plays out in the near term.

Some of these charts are short term scalp plays while others are setting up in longer term consolidations, and thus may require more time before they trigger.

Q Logic (QLGC) is of interest after 14 years of sideways basing.  It's nearing 2 1/2 year resistance.  It would trigger on the daily chart over $13.25.

Charts shown in this post:  SPWR, WBAI, WIFI, TSEM, QLGC, RESN, VII, PKD, OWW

A few others that caught my eye:  VPCO, TTPH, SMED, QUIK, UPL, PSUN

As always, if you take any of these setups use a stop loss or lose your house.

Click on charts to enlarge:

Oil & Gas Sector Scan

These tickers listed in the table below come from a scan I made early this morning.  They have been beaten down with the decline in oil.  Many are sitting in bottoming type formations and some are heavily shorted.

Some of these stocks are lightly traded and thus carry more risk.  Use stop losses or lose your house.

Here's the setup of AMZG I posted on Twitter during the trading day.  It triggered over $1.35.

Click on charts to enlarge view.

Ticker            % of float sold short

AMZG                    6.9
CNX                       5.3
EXXI                    23.9
GDP                     47.5
GST                      11.4
KWK                    31.8
HERO                   21.3
MHR                    22.3
PGN                     43.3
REXX                   20.0
GLF                      12.7
HOS                    11.8
MDR                   16.8
INT                      6.4 

Time for A Retest

Today at midday, the broad U.S. indices are rallying strong with the SPY up 1.56% and the QQQs up almost 2%.

CNBC's Bob Pisani gave several "reasons" for the rally, some being that there's a belief the Fed will remain dovish, that ebola fears are waning with no news of it spreading, and rumors out overnight that the ECB "might consider" new stimulus.

From my view, the violent nature of price action in the indices the last few weeks signals that this will not result in another V bottom as has been the case during this 66 month bull run.

A sell off like we saw last week showed some forced liquidation.  So the lack of that selling pressure this week produces these big gap ups and gains we've seen so far this week.

Now if this rally is for real and we're off to the races again, I would expect oil to rebound as well.  But oil is sitting mostly flat on the day.  This leads me to believe this is a reflex rally, and some sort of retest of last week's action will occur.

So with that I'm going long the inverse ETFs - namely SQQQ and SPXU.


Here's a chart of the SPY - click to enlarge.

Time To Be Nimble

The recent market volatility the last few weeks has many traders wondering if this is the beginning of a market top, or possibly just a reaction to global news flow.

We've had everything from the Russia/Ukraine issue, to the end of QE3 in the U.S this month, to ISIS terrorists in the Middle East, to a sudden drop in the price of oil, and now EBOLA fears.

There's been a lot for the market to digest, and up until mid September the general market indices had held up reasonably well, aside from the weakness in the smaller cap Russell indexes.  And now we're into earnings reporting season.

The energy complex has been destroyed.  The sharp drop in the price of oil makes one wonder if it's signalling coming weakness in the global economy.  The Eurozone is a mess, with Draghi continuing to try and jawbone that stimulus is coming, all the while Merkel sits back and rejects the idea.

What to make of all this?  For me, I care most about the price and volume action in the market leaders.  There have been some failed breakouts recently, while other leading sectors like the biotechs and select restaurant stocks are sitting in constructive bases.

So for now, until we see the market volatility settle down some, and see a valid follow through day in the indices, it's time to do less.  It's a trader's market.  If you're adept at getting in and out of positions quickly, you are probably loving this volatility.

But others should probably wait for a clearer picture to develop.

Here's a chart showing what could be the beginning of a head and shoulder top. Or it could be just another pullback to shake out weak hands.  What I'll be watching with close interest is to see how the S&P 500 acts when it gets up to the 1950 to 1990 range of overhead resistance.

Some names of note in the aforementioned groups that are holding up well:  RCPT, ENTA, AMAG, LOCO, PLKI, DNKN, SONC, TXRH

Click on chart to enlarge.

Comparing IPO Bases

As William J. O'Neil stated in his popular investment book "How To Make Money In Stocks", chart patterns often repeat throughout history, and serve as models for future big winners.

Recently GoPro Inc. (GPRO) came public back in late June,  and quickly started a rapid 100% rise from its IPO price in 1 trading week.  It then settled into a constructive sideways base for the next 8 weeks where it corrected just 28% off it's highs.

The stock broke out on August 28 and has proceeded  to advance nearly another 100% from its breakout  over the July 31 high at $48.40.

A newer IPO in a different sector, El Pollo Loco (LOCO) came public in late July.  It too made a rapid ascent from its IPO price in a week's time, and has now settled into a sideways, 9 week base.  I'm watching this for a close over the intraday high back on September 15th with a corresponding rise in volume.

As always, use stops to protect from potential big losses.

Here are the charts of the stocks mentioned.

Belmont Stakes Payday

Every now and then magic strikes, the stars align, and you come out on top.  I'm not going to bore you with the details of how this came to pass, or to feign any sense of equestrian betting prowess.  Just showing you it can be done.

This ticket actually paid out on 2 superfectas because California Chrome (#2) and Wicked Strong (#9) finished in a dead heat for fourth place.

$8K and a touch more.  What a day ...

Low Priced Compressed Falling Wedges

Here are a few charts I've been monitoring recently.  Of particular note, take some time to scan through the "industrial metals & minerals" on finviz.com.  There's possibly a big move forthcoming in some of the beaten up names in the rare earth elements sector.

Some like TAS, PLM, DNN, RVM  and others have already made small moves off their bottoms and are now poised to make secondary, continuation moves.  Others like QRM, PLG, PAL, AVL, MCP and REE have yet to make their initial push higher.

REE made what looked like a potential breakout from its bottom in early September of 2013.  But then as the stock gained momentum, the company issued more shares to fund operations and diluted the stock.  The stock then made a quick reversal and fell to new lows.  This is why you must use stop losses.

In the earnings report released on March 17, the company said it has enough cash on hand to fund operations for the 2014 full year.  That said, the company has not produced anything yet, and characterizes itself as an "exploration stage company".  It doesn't expect production to begin at its Bear Lodge project in Wyoming until late 2016 at the earliest.  So this remains a very risky play.

There will be opportunities for day trades, swing trades, and longer term position trades depending on your investment style.

Note: DRWI is a straggler not in this aforementioned group, but with a nice pattern.

Always use stop losses in your trading.  If you do otherwise, expect to lose everything you have invested.

Remembering Sean Kilbane

This is not a typical post for this blog.  There will be no stock charts or general market analysis, but the guy I'm going to talk about could surely provide for us an in depth, astute analysis on any given day for the U.S. stock market.

Sean Patrick Kilbane was a friend of mine, and a man I will always remember fondly.  I first got to "know" Sean back in the early '90s when I opened up a trading account with Cleveland-based, Baker & Co.

At the time there were 2 guys named Sean (the other being Sean Watterson) at Baker, so initially it took me a bit of time to discern which guy I was talking to since they sounded somewhat similar over the phone.  But soon enough I was able to know when Kilbane had picked up the phone and answered with his calm, low key, deep voice.

During all those years of stock transactions and back-and-forth banter over the phone, I still had not met Sean in person.  Fast forward to the Fall of 2002 in Sarasota, Florida where I had recently relocated from NE Ohio.

During that same time, Sean had moved to the area to take over as the manager of the Sarasota branch office for Baker & Co.  We first met in person by chance at a local Cleveland Browns backers establishment on a Sunday afternoon.

Sean quickly became an integral part of our close circle of friends.  We collectively commiserated over the Browns, Indians, and Cavs, and always held out hope that "next year" was going to be the year.  Sean was a diehard Cleveland fan in every sense of the word.

Once when one of our friends mentioned that he thought Lou Piniella was doing a decent job as the manager of the Tampa Devil Rays (at that time), Sean looked at him and replied, "but he's a #*%-ing Yankee !"  

We all laughed and agreed.  There was never a question where Sean's allegiance rested as witnessed by the Chief Wahoo tattoo on his upper left arm.

Some who knew Sean referred to him as "kind of a nerd".  With his quick wit and sometimes quirky comments, he generally kept the conversation light-hearted and easy going.  But when you wanted to discuss a serious matter, Sean could provide a well-reasoned, articulate response in a very thoughtful way.

From the way he walked on the balls of his feet with that little bounce, to his sharp sense of humor, to his sincere kindness that he used in his personal interactions, I'm going to really miss Sean.

My brother met Sean only once, but Sean left a lasting impression.  After seeing and reading the coverage of his untimely passing from the Cleveland media on TV and in print, and the heartwarming responses on other social media from his many friends, my brother wrote this about Sean:

"Relatively few people leave this type of legacy at their death. It's actually a very rare thing to see"

My prayers and condolences go out to Ed and VA, and to the immediate family.  And to all his friends from the Happy Dog community.

Here's the story from the Cleveland Plain Dealer: http://bit.ly/1i9TNtf

We just lost a good one.