Gold Star Resources (GSS) : Descending Wedge - Multiple Bottom

Pattern & Technical Analysis

      Loving this chart, GSS trading at 52-week low, due to bearish outlook for mining stocks etc, GLD + XLB are not the hottest trading ETF's but GSS is significantly under-valued. Lets have a look.

We can above the multiple bottoms and the Descending Wedge Pattern : Bullish Reversal Pattern

We have established strong support at the $1.50 mark, this leads be to believe that supply is being meet by demand here...and this 1.50 mark as stopped over-extensions in supply in the past 4 months, hence the phrase "strong" support. It just appears bears cannot push GSS past this level.

• If $1.60 is pierced then $1.80 is the next level.
• If $1.80 is pierced and we get over the $2 mark, then we are looking at a legitimate possible long term trend reversal, Wedges are know for this kind of reversal action.

    We have strong support established, as well as an observable rounding bottom formation at the last touch of this wedge. The wedge channel lines are contracting nicely as they are suppose to, so i believe the bounce off of this 1.50 mark, will be the bounce that pierces the wedge.

Momentum Analysis

Momentum indicators across the board scream over-sold, a we have some specialized momentum indicators with buy signals which i will show below.

5 Day EMA crossed %R in at Over-sold level: Bullish

5 Day EMA crossed True Strength Index at Over-sold level: Bullish



Stochastic & Momentum indicator cross over, plus turning upwards nicely in the Over-sold region of the chart.

   Momentum analysis suggests GSS is definitely over-sold and due for a nice run here shortly. I agree, all the indicators are very over-sold and are turning upwards to climb out of the rut GSS has been in. This is all very bullish for GSS, we can see indicators across the board suggest its time to buy and ride a new wave of positive price action.

 We also got a MACD cross-over taking place as well as a MACD Divergence signal: Super Bullish especially for long term price action.

Volume Analysis

Volume indicators show a decrease in volume over the past two weeks. This is typical in the Descending Wedge Pattern. OBV plus A/D suggest steady accumulation at these price levels with alot more to come.

Entry Strategy

 Based on some of the analysis methods of my system, this is a high probability trade. I think tomorrow we will open either at 1.55 or a penny or two below or a above, depending on the markets overall open, which should be up. I would start by buying a couple 5k block shares with a tight limit. Just test the waters to see if the bottom is legit. We saw a nice hammer candle form today, which is a bullish reversal candlestick.

   
Overall GSS looks like a great bottom trend reversal play, and since its ADX rating is 17 is definitely in a oscillating zone and indicators should be used to judge if it is over-sold....**which it certainly is**......i going to initiate a 70,000 share position, around 1.60 tops.

Position: Long

Target: $2.45

First Nationa Bank (FNB): Push Higher, Or Dip?

Price action today for FNB's stock was quite interesting, this chart set up as well as equity analysis for FNB leaves us with a interesting Picture.

Basic Chart & Pattern Analysis

Adam & Eve Double Bottom: Characteristics?

• Appearance: Double Bottom with one narrow & one wide bottom, break-out upward.
• Short Term Bullish Reversal.
• Performance Rank: 8 out 0f 23 (Bulkowski Back-Tested.)
• Average Rise (statistically speaking): 37%
• Volume Trend: Downward during formation of pattern.

What we can see is FNB has recently had a confirmation of the short-term bullish reversal pattern over the past 6 trading days. The pattern is pretty evident and almost text book. The pattern is tall & has formed at yearly highs, which adds further confirmation to a continuation of the trend reversal upwards.

Also We Can See

• Bull flag, occurring after confirmation of Double Bottom pattern = Very Bullish, bull flags are a very reliable bullish continuation signal, just shows a trough (buy on dip) in a up-trend.
• Described declining volume during formation of pattern.

These two patterns formed over the past two months if a very strong indication that the uptrend for FNB has some more room to run higher. Overall pattern analysis flags FNB as being bullish.

Trend Extension Strength + Momentum

Currently FNB is in an Oscillating Range Via Trend Extension, so the best way to analyze if it is Over-Bought or Over-Sold is to use indicators and oscillators. As we can see above...

• RSI turning upwards to cross 80 line.
• Stochastic Cross-over in progress over 100 line.
• Momentum indicator to make another run higher

So what this more-less means is that the trend has been bullish for many months now, but it still has room and strength for a continuation upward, but obviously is not at a discount by any means via Technical Analysis.

Volume Analysis

Volume action for FNB is clear. Accumulation, Accumulation, Accumulation. This is all very bullish, and shows that even tho the price ran down several times, back-door accumulation by professionals as well as noise was occurring. This shows the demand for FNB stock has consistently been on the rise, and the volume indicators alot more accumulation to come.

Entry Strategy

The only thing i did not like today was FNB long-legged Doji Candle-Stick on an increase in volume. This Candle-Stick occurs when supply and demand are equally meant, and shows legitimate indecision between Bull's & Bear's. But it did still close green so that is better than red.

Regardless i think to enter FNB as a trade it obvious bull's may be tiring for the moment, tomorrow mornings price action based off of volume will indicate if we see a minor trough-blip or a solid rise tomorrow. If the minor trough-blip occurs, i expect a short-run retracement to $12.12-$12.15. But i think within the next two weeks FNB should close around $13.70-$14.05 Range.

Overall the Trend is still got room to rise higher, and is strong, on a multi-month chart perspective low 12's are a good entry, for a nice 7% to 9% pop. Tomorrows price action (which i expect to be down) will tell us alot about the short-run direction of FNB's price, but long-term, the chart is a confirmed BUY, once it pulls back to the low 12's.

Position: Long

Target: 13.80 - 14.05 (Next 2-3 Weeks)

Hyper Dynamics (HDY) : Ascending Triangle Break-out

In the past month shares of HDY have been pounded, following the speculative oil company's failure to spud legitimate oil from their SABU-1 oil well. Regardless the stock plunged from from $2.50 range in late February to the $1.30-$1.40 range through-out this month to this day.

HDY has been bouncing consistently off of the 1.30 support line, this proves to me that the intrinsic supply & demand point has established this price area as being mainline support as well as a price bottom..

Pattern Analysis

What we can see is a few things

• Text book Ascending Wedge
• Gap to $2 to fill.
• the 5th point of the 5-point Ascending Triangle confirmation pattern line is due to touch come Monday.
• Morning Star Pattern formed in the past 3 days of trading, as well as a bullish engulfing pattern. Both being strong reversal candle patterns.

Volume Analysis

Above we can see that Accumulation/Distribution & On-balance volume have been oscillating in a range with HDY's price action, this downward sloping trend in volume (light volume since gap down as well) is confirmation a large move is to come, and based off of the chart it looks like a bullish pennant for the volume pattern.

The supply of HDY on the market has been meet by serious demand in the low 1.30's, volume dictates an over-extension in supply, and bears are loosing power and grow tired. Also there is a 25% short float on the stock, this means shorts will cover once bears loose steam, bringing a major short squeeze play into play. Which will blow HDY's PPS close to 1.80. The continuous decline in volume ended Friday with a 11% gain on 12.4 million shares. That's huge when AVG volume is 3 million shares.

  

Volatility Analysis


For volatility analysis we can see the following

• Contraction in volatility, squeeze is in progress, this will expanded either upwards or  downwards, and oscillators and momentum indicators strongly suggest upwards.
• %B indicator shows bounce and should easily pierce 100 line upper band tag.
• A move is coming soon. Volatility would indicate another swing upwards short term.

MACD Divergence



 We can see a massive divergence signal in HDY's price action as well as its MACD histogram reading. This is a high bullish indication for HDY and also further suggests another run int he equity.



 

Overall HDY is flagging a buy on many more indicators and analysis methods, i only covered the more important ones. I believe HDY is poised for another major run here shortly. I do currently own 125,000 shares of this company, i purchased last week as well for a nice swing trade.

Position: Long

Target Price: 1.72-1.80 (High) 1.63-1.70(Low)

Akamai Technologies: AKAM 20% Break-Out Play

AKAM has recently been flagged as a buy,on my discretionary short-run trading system. What we see here is a very profitable application's software company, that runs a very efficient corporate operation. they have an amazingly strong balance sheet, with little to no debt , and do much of their work directly with Apple, as we all know, just had a valuation raise to $560 a share.

AKAM being one of the more profitable companies in the computer service industry has a great pre-break-out chart set up as well, lets take a look.

Above we have the following.

• Stochastic Over-Sold Crossing Signal.
• Momentum turning towards a reversal across the 100 line, which is the confirmation to buy.
• A reliable Ascending Triangle Chart Pattern.

Bollinger Analysis

• We can also see here from our Bollinger Analysis is that the bands have contracted, indicating that a breakout, either being up or down is due here relatively soon, and since AKAM is in a consolidating oscillating range, using oscillators is the best way to determine if it is under or over priced.
• Based off of the evidence the indicatoror's suggest that both Bollinger %B and CCI as well as Stochastic & Momentum indactors show that AKAM is oversold greatly.
• Evidence also suggests AKAM is poised to break-out upwards

All in all, what we have is a financially strong, profitable company, that based off of Technical Analysis is greatly oversold and is poised to climb to a solid $40.00 in the next 3 weeks.

Position: Strong Buy

Target Price: $40.50-$41.00

Pacific Ethanol Corporation PEIX : Ascending Trinagle Breakout

PEIX is candidate for a easy 15-20% gain. The ethanol producer (being on of the largest producer/distributors on North America) has been trading in a tight consolidation range of an ascending triangle for several days now with declining volume.

• Ascending Triangle formation, meeting textbook parameters, this chart pattern in a smoking gun for a bullish-reversal due any day now.
• Declining volume, also goes in par with further confirmation of the ascending triangles up coming bullish movement.

• Contracted Bollinger Bands also show a movement in price action will occur any day now.
• Momentum indicator is hugging 100 line, showing the current consolidation in progress as well

Overall PEIX has to move and sometime soon, as we have seen volume gradually fall lower and lower well below the 50-day moving average (of volume) its safe to say we should see a break upwards come Monday or Tuesday, Wednesday at the latest.

I predict we will see the triangle formation broken upwards tomorrow, and the run should be to $1.45-1.50 range.

PEIX: Strong Buy

Price Target: $1.45

Breakout: Sprint

Sprint (S) recently came across my system as a buy based off of some interesting continuation pattern signals. Below is an analysis of some reasons to consider this a high probability equity trade.



• Ascending Triangle Continuation chart pattern....broke past the pattern line early Friday morning signaling a buy.
• MorningStar candle pattern followed by a Three White soldiers Candle pattern, both are trend reversal patterns.
• Declining volume In sync with ascending wedge pattern.

Moving Averages are crossing...and are starting to head forward.

DMI +/- is about to cross as well. All in all sprint is treading near its 52-week low point...and has many indicators and bullish signals going on here. I think a trend reversal is definitely in progress..and Friday was the confirmation day. Buying in right prior to a breakout is how the big gains are made. What really nails the head on this situation is the candle patterns. A Morning star sharing with a Three White Soilders pattern is very rare...and both are very high probability bullish trend reversal patterns.

Position: Long S







TrinQuint Semi-Conductor: Volatility Spike Play.

Shares of TrinQuint Semi-Conductors (TQNT) tumbled 26% today during trading, due to a failure to beat Wall Street earnings expectations, and had a negative growth forecast due to Apple scaling back on orders for their computer hardware parts. TQNT supplies chips for Apple, the bulk of their business is done with Apple. For more here is the story. http://www.marketwatch.com/story/triquint-announces-third-quarter-2011-results-2011-10-26

 

Regardless, my trading fund has a Relative Value Volatility Arbitrage aspect to it, so anytime i see a equity get hit real hard real fast on a rapid negative volume spike, it comes up on my radar as a possible share price bounce play.

 

 

 

What we can see on the chart above is TQNT was in a long term giant Head & Shoulders chart pattern, and in early October it finally bottomed out and began a new trend upwards. What happened last night was a event driven, fear induced panic, that made people all blow out simultaneously. In reality a 10-15% pull back would have been a understandable behavioral reaction.....but 26%? Definitely way to oversold.

 

What we can see is:

• Massive sell off occurred on high volume. Generally after a giant down day like this, many traders and investors will come up and snag a bunch of shares at a discount price (in their mind) and will help retrace some of the losses from the prior trading session.
• Volatility: Any 30% price move in one day, will eventually lead to a mean reversion to moving averages or linear regression lines. This event is not that serious that it wont recover from this behavioral sell off.
• The Professionals: Best believe Market Makers, Hedge Fund Managers, Professional Equity Traders will come in and accumulate this stock for a easy 10-15% pop upwards in the next coming weeks. 

 

 

Above:  Linear Regression Analysis.

• Above we can see that TQNT is trading well below its linear regression levels by at least .45 cents a share. We can fully expect to see a reversion to that mean of 5.80 within a few weeks at the latest.
• 60 day Lin-Reg line is at $5.80 Per Share
• 30 day Lin-Reg line & Lin-MA is at $7 Per Share

Above: Mean Reversion Analysis Using Simple Moving Averages

• All moving averages suggest a reversion back to the mean target range of $6.25 Per Share on a monthly basis & $7.00 Per Share on a Weekly Basis.
• Realistically longer ranging Moving Averages are more accurate after short term event fluctuations.

In the end TQNT may have some issues, but its appears to be very oversold at this point, i believe it bouncing back to 6.50-7 within a month is not a unreasonable assumption and should come to fruition. But with the market acting the way it is nowadays, anything can happen.

Position: Long TQNT