Cutting your losses and letting your winners ride

Good Morning Traders,

Just returned from camping with the family over the weekend.  I see our charting of CDY and TLR have returned the positive results we had hoped for.  Now that our plan was successful we need to look at our original plan and revise it some to reflect our current situation.  In order to do so we just need to look back at the charts and identify points of resistance and support again.

 We can see from the chart of CDY that the price action is between resistance levels of .21 (above) and .19 (below).  There is another resistance point below the .19 at .18.  Outside of these points the only point of resistance above will be the 200-day moving average at .275.  To gauge the health of the stock we need to look closer at the different time frames and watch the money flow, MACD, and RSI:

It looks as if the stock is consolidating for the next move up (in my opinion).  The .19 level of support is very strong and it appears traders are recognizing this  and returning to the stock.  The money flow and RSI are both on the rise while the MACD looks ready for another bullish crossover.  Both the daily and 5-minute chart are live so you can monitor them right here if you don't want to set up your own charts, but I encourage you to do the legwork. My son always reminds me practice makes progress.Take the information in this post to do your own evaluation of TLR.  I am always on the lookout for feedback and comments so let me have 'em and I'll be happy to offer my insight.

Famous Trader Tymothy Sykes reveals in his last video session his acronym ALFT.  Always Looks For Tops.  If you can spot the top of the run, you can avoid the reversal.

Trade Well,

Trader43

Unusual trading activity at CDY

Good morning traders,

We have another stock today to put on the radar this AM.  CDY.

You can see this industrial metals and minerals stock has been in a down trend for over a year.  The looming threat of being De-listed coupled with the steadily disappearing stock value is enough to send investors racing to the door. 

Should we turn out the lights yet?

 

Several interesting discoveries as of late suggest there may be an opportunity to capitalize.

(1)  The downward price action has broken out of its descending wedge pattern and is currently trading above the 50-day moving average for the first time in over a year.

(2)  The stock has recently traded in multiples of its daily trading average. 

(3)  Robert Kopple (an owner of greater than 10%) has been on a buying frenzy.  Recently reported by the SEC were almost a half million shares purchased from AUG 12-14.

(4)  A press release was put out yesterday stating NYSE-MKT Accepts Cardero's Plan of Compliance.

This is exactly the type of setup we look to profit from.  Currently trading for less than $.13/share it would not take much to earn a fantastic return in a short amount of time.

Put this one on your watch list for the next few sessions and formulate your trading plan before you buy.

Don't give in to gambling,

Trader43

The importance of buying and selling breakouts and resistances-Refining your plan

Good morning Traders,

This blog is not like most others.  This is not one of those get rich quick schemes where I pump stocks and sell you my shares leaving you with my "baggage".  I simply watch stock charts in the hopes of catching low priced stocks for a short trade.  The only stock I have purchased that is on this blog is PLUG:

I purchased shares at the beginning of the breakout above $.40 (at .4047) and sold about a week later at .5218.  This represents a gain of about 29% in a week.  This return is better than any index this year.

The opposite holds true with LPR:

I had shown the breakout and resistance levels as highlighted above in the hopes of catching some momo like PLUG.  The plan was to pick up shares on a breakout above .60.  While I watched for the stock to surpass this level it took a nose dive. It is now trending lower along the original downtrend line:

This is why we stick to the facts of our trading plan not our feelings.  By trading the facts and not my feelings I narrowly avoided a 50% haircut.  Please do not mistake a chart setup for a buy endorsement from this site.

Now on to the good stuff:

Two plays from the past posts are still in play.

BRD:

BRD announced earnings this week and the market did not kick her to the curb.  The ascending triangle is still in play and is worth a watch over the next few sessions.

TLR:

Announced earnings as well this week and its current chart looks good in the near and medium term.

We've had quite a few readers over the weeks.  I would welcome any feedback, comments, other trading setups/lessons, or simply donate a cup of coffee below.

Thanks for reading and have a great weekend,

Trader43

New Pennystock Charts getting close to a breakout

Good Morning Traders, It's been a few days since my last post so lets get right to it. The first chart up for watch is TLR.

TLR is consolidating just north of the 200-day moving average and the 50-day average is steadily rising. Timberline has been forming a very strong base all year long. Remember, the longer the base the larger the breakout move. Resistance represented on the chart by the long purple line is right on top of the price action. Less than 1% of the 62 Mil shares in the float are short is another great sign.


The next chart to be added to the list is QMM.

Traders interested in a little more excitement may wish to check out WEST.

The Price action is pushing up against support (.03) and closed above the 50-day moving average. A break above $.03 with large volume may indicate a small bounce off the bottom.

 Thanks for viewing and Trade well, not often.

Low Risk Ascending Triangle plays for the week of 7/29

Good morning traders,

Now that I've covered the ascending triangle in yesterdays post we can use the strategy on other charts that are similar:

Good luck Traders,

Trader43

How to trade the ascending triangle (PLUG)

Good Morning Traders,

I'd like to take a few moments to explain the trade I entered on PLUG to illustrate the low risk setup. 

There are many types of traders out there with many different education levels.  This point really hit home with me while surfing Socktwitsdotcom last week.  There was an individual asking everyone's opinion on buying more PLUG.  He claimed to be in at $.48 with 2000 shares.  He bought the top of the last rally and is underwater almost 12%. 

This question tells me several things:

1)  He had no plan to enter this trade and rushed in when it was running.

2)  He is having serious doubts because the market is moving against him.

3)  He risked almost $1000 to enter a trade he had no understanding of.

I responded that it was a low risk trade to average down.  I wrote "I would add here. Set your stop loss just south of the 50-day average. Volume is drying, but someone has been buying all day."  To which he replied "my current average is .47, were about on the 50 EMA now. Would like to at least break even." 

This guy has no idea what he is doing.  We are swimming in a sea of sharks in the market folks.  Make no mistake.  We can swim among them and even get small morsels that are left over with a good plan.  Without one we will be consumed and left for dead.  The person looking for advice is so consumed with his own problem of what to do that he does not even see the indicators in the water.  How long before he is eaten is only a question of how much money he tries to lose.

Notice the two support/resistance lines I have drawn on the chart above.  The white horizontal line about $.40 and the sloped line rising to meet the horizontal one.  These two lines represent the trendlines of the chart.  As you can see the lines converge and we will run out of room.  One of these two lines will continue to represent the current trend line while the other will be broken.  The price action is as simple as that.  Will the horizontal line continue to hold the stock price down, or will the sloped line continue to carry the price upward. 

The Ascending triangle is known as a continuation pattern.  Simply stated it usually continues the trend it was originally on prior to the formation.  In this case a Bullish trend.  In order to take the lowest risk trade possible (assuming long position) one would purchase his shares as close as possible to the ascending trend line.  The moment you know to exit is when the price closes below the line for the day.  Notice the price action may go above or below the trend lines, but never closes at this price.  Get too close with your stop loss and you may get stopped out of a winning trade.

Best of luck trading,

Trader43

Friday mornings stocks in play

Good morning traders,

PLUG was finally up yesterday 8% on over 680k shares traded.  It was the biggest day in over a week.  The stock closed very close to the high for the day and was in a steady uptrend.  Pulling away from the 50-day average is definitely a positive sign.  I'll be watching closely today for new highs.

The metals from previous posts (BRD, GSS, GPL, and LPR) are still trading sideways.  They have reached a relative low and are basing strongly.

I dumped CBRX last week to Get into PLUG.  I read this morning that they will reverse split at a 1:8 ratio.  I've never had a profitable trade when these stocks reverse split.  Scratch this one off your watch list for now.

Those with strong stomachs may wish to check out FFN this AM.  Up 25% yesterday on the coattails of FB's highly profitable quarter, it may have more room to run.  Beware of the First half hour Bull Trap.  Patience, timing, and a plan is what separates the winners from the bagholders.

Best of luck trading and have a great weekend,

Trader43

Smart Money in small Cap Stocks

Good morning,

I began the last post with touting PLUG.  I entered plug long due to the ascending triangle and set my stop loss just outside the 50-day moving average.  The last 3 sessions have been bearish.  The first 30 to 45 minutes the market lets it run then spends the remainder of the day pushing it down.  In the last half hour the sellers back off and it climbs back to an almost negligible loss.  I fear with the declining volume and the strength of the upper resistances (ie. $.42, and $.45) I may be stopped out today.  It is my experience that resistances do not hold up forever.  The price action has bounced off the 50-day moving average 3 times in the last 10 days.  Watch closely for some much needed news.

On a brighter note precious metals rallied yesterday and are aiding small cap mining stocks. GPL, GSS, and BRD have all closed above resistance due to yesterdays rally.  I would recommend watching for a pullback to a support level.

As always good luck trading,

Trader43

NYSE, NASDAQ, and AMEX Stock charts cheaper than $1 with positive momentum

This weeks scan provided several possible turnaround plays.  I'll be sure to be watching this week.

PLUG:

I like PLUG for several reasons:

1) The stock price has dropped in between the 50-day and 200-day moving averages.  The 50-day is positive and will push through the 200-day with some positive momentum.

2) Low Short ratio (<7%) 

3) Recent insider buying: Most recent purchases were at  $.36


BRD:

The stock price is forming an ascending triangle just below the 50-day moving average.  Trader Beware: although price action above resistance at $.56 coupled with larger volume will trigger an uptrend it still has failed to best the 50-day MA.

Others on Watch include:

APPA,BRD,ETAK,GPL,COOL,CBRX,GSS,IVAN,PLUG,LPR,SSN