Eagle Cant Fly Higher?

Eagle Material (EXP) is currently thumping against a multi-year resistance zone shown on the chart below. The first hit was in 2006, while the second and third hit were this year. It seems that the 78 level is currently a bit tough to break and if 2006 is any guide, we may see a reversal. Today’s long candle and ordinary volume (despite announcing good results) signals that buyers are not interested to take EXP any higher.

Did you know that eagles’ vision is among the sharpest of any animal and some eagles can spot an animal the size of a rabbit up to two miles (3.2 km) away!!!

EXP Weekly

EXP Weekly

EXP Daily

EXP Daily

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Sitting On Thin Fiberglass

Owens Corning (OC) is the largest fiberglass manufacture in the world. OC created a H&S Top that spans the whole 2013 YTD. This is a huge pattern with a neckline at $36. A clean break targets 27.

OC Weekly

OC Weekly


Giga P/E Of The Industry

Gigamon (GIMO) ranks number 1 as the highest P/E ratio in the Networking & Communications Devices industry recording 168.  According to finviz .

Meanwhile, GIMO is in the late stages of completing a 3-months H&S Top. A closing below the neck line at 31.75 implies a target of $22.

3Q results are due Nov 4th.

GIMO Daily

GIMO Daily


Topping Tees

Trulia & Tesla both are on the verge of completing a H&S Top. Lets take a look at each.
First up Trulia (TRLA). The 3-months H&S Top is sitting on gap on Aug 1st. Usually gaps act as support making this short idea tricky to enter. Short float is at 17%.

TRLA Daily

TRLA Daily

 

Meanwhile, Tesla (TSLA) 2-months H&S Top is less complicated with no gaps below. The pattern is completed upon closing below 160, targeting $130.. Short float is huge almost at 25%=1 in every 4 shares is shorted.

TSLA Daily

TSLA Daily

 


How LDR Can Help You Minimize Losses

A quick review of the posts in Sept yielded the following:

-8 patterns were completed and profitable=$$

-3 patterns did not complete = no trade, no harm

-3 patterns were completed but failed=loss

If you traded all 11 patterns & used money management on the 3 that failed you would have been net profitable. Speaking of money management, here is one tip I use.

Setting your stop loss

I learned this simple money management technique from a well known & successful trader, its called LDR. LDR stands for Last Day Rule and is pretty straightforward. When taking a position on a breakout H&S Top or Double bottom (it doesn’t matter), the stop would be the lowest point of the day. Here is an H&S bottom example. As you can see below, the stock after breakout never challenged the low of the breakout day. (NB: This technique is not fail proof, its just a way to decide your stop loss)

Guess the name of the stock and type it in the reply below. The first correct answer gets a trading related ebook. 

risk

Have a great weekend!


Friends Of Zillow

Zillow (Z) is one very very lucky stock. Z has 2 friends, one very close & old; an 11-months trendline and the other a new 11-week Gap. The trendline has been a very good friend saving Z from the bears on a couple of occasions. Meanwhile the gap saved Z from the recent shutdown/ceiling conundrum and acted as  a trustworthy support. So what has changed? The long time trend line has turned its back on Z the last 2 days despite a raging new highs market. A H&S top slanting downwards is in the making and the neckline may meet the gap (the ONLY friend Z has left).

Zillow Daily

Zillow Daily


Lucky Atomic Number 13

Atomic number 13 in the periodic table is Aluminum or Aluminium. More about the history of aluminum’s naming and discovery here. Now lets look at the third largest producer of aluminum, Alcoa (AA).

AA completed a 2-year falling wedge after breaking out last week. Whats interesting here is the other smaller pattern that has formed prior to breakout which is an 8-months H&S Bottom which has yet to complete.  The neckline is a bit tricky because the pattern is sloping downwards so watch 8.68-8.88 area. A move beyond that area target $9.80

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Whenever you find yourself on the side of the majority, it’s time to pause and reflect.
– Mark Twain

Alcoa weekly

Alcoa weekly