Trending123 Blog

WLT- Warns After-Hours 09/02/10

2010-09-02T23:29:44Z

WLT- Warns After-Hours 09/02/10

Walter Energy lowers FY10 coking coal sales expectations (77.93 +0.78) Co announced that it is modifying its full-year 2010 coking coal sales expectations. The Company now expects to sell between 7.2 and 7.5 million tons for the full-year 2010, compared to a previously expected range of between 7.7 and 7.9 million tons, primarily driven by lower expected coking coal production volumes. Coking coal production volumes are now expected to total approximately 1.8 million tons in the third quarter at a cost of approximately $60 per ton. The co is maintaining coking coal sales volume expectations of 1.8 to 2.0 million tons for the quarter. However, the higher cost per ton is expected to lead to lower operating income margins, with operating income now expected to average between $107 and $110 per ton, compared to the previously expected range of $110 - $115 per ton.

Stock continues to sell off after-hours

Carl Levin Smacks Down Goldman CFO On 'Shitty Deal' E-Mail

2010-04-28T03:12:15Z

Carl Levin Smacks Down Goldman CFO On 'Shitty Deal' E-Mail

17 Symmetrical Triangle Stock Plays Flagged This Week

2010-03-01T20:02:45Z

17 Symmetrical Triangle Stock Plays Flagged This PastWeek

Introduction

The triangle pattern, also called the "coil," appears in three varieties:

1. symmetrical, 2. ascending, and 3. descending.

Generally, a triangle pattern is considered to be a continuation or consolidation pattern. Sometimes, however, the formation marks a reversal of a trend.

Symmetrical triangles are generally considered neutral, ascending triangles are bullish, and descending triangles are bearish. From a time perspective, triangles are usually considered to be intermediate patterns. Usually, it takes longer than a month to form a triangle. Seldom will a triangle last longer than three months. If a triangle pattern does take longer than three months to complete, Murphy advises that the formation will take on major trend significance.

What does a symmetrical triangle look like?

Converging trend lines of support and resistance gives the triangle pattern its distinctive shape. This occurs, Kahn explains, because "the trading action gets tighter and tighter until the market breaks out with great force." Buyers and sellers find themselves in a period where they are not sure where the market is headed. Their uncertainty is marked by their actions of buying and selling sooner, making the pattern look like an increasingly tight coil moving across the chart.

As the range between the peaks and troughs marking the progression of price narrows, the trend lines meet at the "apex," located at the right of the chart. The "base" of the triangle is the vertical line at the left of the chart which measures the vertical height of the pattern.

Current Stocks That Fit This Pattern Within The Last Week

LRCX

LAMR

CHKP

SBUX

HITK

CYTX

CENX

YONG

GLBL

AAPL

A symmetrical triangle shows two converging trend lines, one is ascending, the other is descending - creating a sideways symmetrical triangle. The formation occurs because prices are making both lower highs and higher lows. Elaine Yager, Director of Technical Analysis at Investec Ernst and Company in New York and a member of Recognia's Board of Advisors, notes that the pattern should display two highs and two lows, all touching the trend line as - a minimum of four reversal points is necessary to draw the two converging trend lines. The diagram has these points noted.

1. symmetrical bottoms - prices trend down then form lower highs and higher lows. Breakout can be either downward or upward. 2. symmetrical s - prices trend up then form lower highs and higher lows. Breakout can be either downward or upward.

Why is the symmetrical triangle pattern important?

A symmetrical triangle pattern is relatively easy to identify. In addition, triangle patterns can be quite reliable to trade with very low failure rates. There is a caution concerning trading these patterns, however. As mentioned previously, a triangle pattern can be either continuation or reversal patterns. Typically, they are continuation patterns. To achieve the reliability for which the triangle is well known, technical analysts advise waiting for a clear breakout of one of the trend lines defining the triangle.

Triangle patterns are usually susceptible to definite and dependable analysis, with the proviso that the investor must wait for a reliable, as opposed to a premature, breakout. Bulkowski advises that, in general, the failure rate for triangles drops significantly if the investor waits for a valid breakout and, once that breakout occurs, the pattern proves strongly reliable.

Murphy advises that a minimum penetration criterion would be a closing price outside the trend line and not just an intra day penetration. Similarly, Schabacker warns of the "false moves" and "shake-outs" which most commonly attend the triangle.

Is volume important in a symmetrical triangle pattern?

Volume is an important factor to consider when determining whether a formation is a true triangle. Typically, volume follows a reliable pattern: volume should diminish as the price swings back and forth between an increasingly narrow range of highs and lows. However, when breakout occurs, there should be a noticeable increase in volume. If this volume picture is not clear, investors should be cautious about whether the pattern is a true triangle.

This traditional volume pattern develops because of investor sentiment during the creation of a triangle. Investors are uncertain. This uncertainty means that they are buying and selling sooner, which translates into a narrowing of the highs and lows, creating the "coil" shape, indicative of the triangle . Because investors are uncertain, many are holding on to their stocks, awaiting the market's next move. When breakout finally does occur, there's a surge in market activity because investors are finally certain enough about the direction of the market to release their pent-up supply or demand.

What are the details that I should pay attention to in a symmetrical triangle pattern?

1. Occurrence of a Breakout - Technical analysts pay close attention to how long the triangle takes to develop to its apex. The general rule, as explained by Murphy, is that prices should break out - clearly penetrate one of the trend lines - somewhere between three-quarters and two-thirds of the horizontal width of the formation.6 The break out, in other words, should occur well before the pattern reaches the apex of the triangle. . Adherence to this rule is strongly advised by Yager, She adds that the closer the breakout occurs to the apex the higher the risk of a false breakout.

To take the measurement, begin by drawing the two converging trend lines. Measure the length of the triangle from its base to the apex. Next, plot the distance along the horizontal width of the pattern where the breakout should take place. If prices remain within the trend lines beyond the three-quarters point of the triangle, technical analysts will approach the triangle with caution. In much the same manner as Yager, Murphy warns that if prices don't breakout of the trend lines before that point, the triangle "begins to lose its potency and prices will simply drift out beyond the apex with no surge in either direction.

2. Price Action - Unlike ascending and descending triangles which give advance notice of their intentions, the symmetrical triangle tends to be a neutral pattern. Murphy advises that the symmetrical triangle is generally a consolidation pattern. This means an investor can look to see the direction of the previous trend and make the basic assumption that the trend will continue. However, many experts advise investors that because the breakout direction could go either way that they wait until the breakout occurs before investing in or selling the stock. Schabacker refers to a symmetrical triangle as a "picture of hesitation.

3. Measuring the Triangle - To project the minimum short-term price objective of a triangle, an investor must wait until the price has broken through the trend line. When the price breaks through the trend line, the investor then knows whether the pattern is a consolidation or a reversal formation.

To calculate the minimum price objective, calculate the "height" of the formation at its widest part - the "base" of the triangle. The height is equal determined by projecting a vertical line from the first point of contact with the trend line on the left of the chart to the next point of contact with the opposite trend line. In other words, measure from the highest high point on one trend line to the lowest low point on the opposite trend line.

Both these points will be located on the far left of the formation. Next, locate the "apex" of the triangle (the point where the trend lines converge). Take the result of the measurement of the height of the triangle and add it to the price marked by the apex of the triangle if an upside breakout occurs and subtract it from the apex price if the triangle experiences a downside breakout.

For example, working with a symmetrical triangle, assume the highest high of the pattern occurs at 100 and the lowest low at 80. The height of the pattern is 20 (100 - 80 = 20). The apex of the triangle occurs at 90. The pattern has an upside breakout. Using the measuring rule, the target price is 110 (90 + 20 = 110).

4. Duration of the Triangle - As mentioned before, the triangle is a relatively short-term pattern. It may take up to one month to form and it usually forms in less than three months.

5. Forecasting Implications - Once breakout occurs, the symmetrical triangle tends to be a reliable pattern. Bulkowski calculates failure rates ranging between 2% and 6% for symmetrical triangles after a valid breakout.

6. Shape of Symmetrical Triangle - The pattern should display two highs and two lows, all touching the trend line - a minimum of four reversal points is necessary to draw the two converging trend lines.

7. Volume - Investors should see volume decreasing as the pattern progresses toward the apex of the triangle. At breakout, however, there should be a noticeable increase in volume. Like reversal patterns, volume is more important on the upside than the downside. Therefore, an investor will be particularly interested in seeing an increase in volume on breakout if the pattern is moving upwards. Similarly, if prices are experiencing an uptrend, investors should be looking for volume to increase as prices move up and fall as prices fall back.

8. Premature or False Breakouts - Bulkowski calls them "premature" false breakouts and Schabacker refers to them as "false moves" or "shake-outs." Both agree that triangles are among the patterns most susceptible to this phenomenon. Because the pattern can be either a reversal or continuation pattern, investors are particularly susceptible to false moves or, at the very least, confused by them. In addition, because volume becomes so thin as the triangle formation progresses to the apex, it takes very little activity to bring about an erratic and false movement in price, taking the price outside of the trend lines.

To avoid taking an inadvisable position in a stock, some investors advise waiting a few days to determine whether the breakout is a valid one. Typically, a false move corrects itself within a week or so. A key sign of a possible false move is low volume. If there's no pick up in volume around the breakout, investors should be wary. Typically, a good breakout from a triangle formation will be accompanied by a definite surge in volume.

There are situations, however, where a false move will occur with high volume. According to Schabacker, these are the most dangerous variety of false moves. The only advice experts can give to investors who fall prey to one of these false moves is to reverse their positions as soon as they become aware of the true movement of the stock.

It is also advisable to be increasingly suspicious of triangle patterns where the breakout occurs very close to the apex. Because trading is so thin at this point, there is an increased likelihood that a false move could occur. Also, false moves are more likely with symmetrical triangles, maintains Schabacker. With the right-angle triangles, the trend is suggested by the pattern itself. Therefore, a deviation from that trend is more likely to raise the suspicion that it may be a "false move."

How can I trade this pattern? Just follow the instructions!

LRCX

LAMR

CHKP

SBUX

HITK

CYTX

CENX

YONG

GLBL

AAPL

Learn More

22 Continuation Bullish Wedge Chart Patterns To Consider

2010-02-20T20:43:19Z

22 Continuation Bullish Wedge Chart Patterns To Consider

Implication

A Continuation Wedge (Bullish) is considered a bullish signal. It indicates a possible continuation of the current uptrend.

Description

A Continuation Wedge (Bullish) consists of two converging trend lines. The trend lines are slanted downward. Unlike the Triangles where the apex is pointed to the right, the apex of this pattern is slanted downwards at an angle. This is because prices edge steadily lower in a converging pattern i.e. there are lower highs and lower lows. A bullish signal occurs when prices break above the upper trendline.

Over the weeks or months that this pattern forms the trend appears downward but the long-term range is still upward. Volume should diminish as the pattern forms.

Trading Considerations

Pattern Duration

Consider the duration of the pattern and its relationship to your trading time horizons. The duration of the pattern is considered to be an indicator of the duration of the influence of this pattern. The longer the pattern the longer it will take for the price to move to the Target. The shorter the pattern the sooner the price move. If you are considering a short-term trading opportunity, look for a pattern with a short duration. If you are considering a longer-term trading opportunity, look for a pattern with a longer duration.

Target Price

The target price provides an important indication about the potential price move that this pattern indicates. Consider whether the target price for this pattern is sufficient to provide adequate returns after your costs (such as commissions) have been taken into account. A good rule of thumb is that the target price must indicate a potential return of greater than 5% before a pattern should be considered useful. However you must consider the current price and the volume of shares you intend to trade. Also, check that the target price has not already been achieved.

Criteria that Supports

Volume

Volume should diminish as the pattern forms.

Criteria that Refutes

Moving Average

The penetration of the 200-day Moving Average by the price is a false bear signal.

Rising or Stable Volume

Volume should diminish as the pattern forms. If volume remains the same or increases this signal is less reliable.

Underlying Behavior

In this pattern prices edge steadily lower in a converging pattern i.e. there are lower highs and lower lows indicating that bears are winning over bulls. However, at the breakout point the bulls emerge the victors and the price rises.

Although it appears things are changing and the "BULL" is lurking, this pattern is typically "corrective" in nature to a larger trend or pattern. These wedges can typically retrace 50-65% of the FALL before it resumes the primary trend.

Statistics

Percent of successful formations – 81% Average rise of successful formations – 46% Likely rise – 20% Failure rate - 37% Average time to throwback completion – 11 days

ERES

EBIX

CHKE

WATG

ZOLL

ADBE

SNSS

PSEC

ORCL

CLFD

CSIQ

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Buy Berkshire Hathaway Before it Breaks Out

2010-01-27T23:16:12Z

Buy Berkshire Hathaway Before it Breaks Out

After closing the largest deal in its history by acquiring railroad company Burlington Northern Santa Fe Corp. (BNI), Warren Buffett's Berkshire Hathaway completed a 50-to-1 stock split of its Class B shares on Jan. 21 to accommodate the deal.

And Tuesday came the announcement that Berkshire Hathaway (BRK.B) would replace BNI on S&P 500 Index (SPX), which will be one of the biggest additions to the benchmark index in years.

Due to its more than $3,400 per share price tag prior to the split, BRK.B had been excluded from the index because it didn't have enough trading volume to meet the index's standards. But the stock split resulted in shares priced in the $70 range, and more than 14 million shares change hands on the day of the split.

So, shares of Warren Buffett Inc. are now affordable for the average investor, but does that mean you want to go out and buy BRK.B now?

Well, if the charts are any indication (and they are), then the answer is an unequivocal yes!

Berkshire Hathaway (BRK.B) About to Take Off

The stock split was the catalyst for an upside breakout in BRK.B from a rectangle pattern.

An upside breakout is a bullish signal that occurs when the price of a financial instrument breaks out through the top of a trading range. This technical event indicates that prices will rise explosively over a period of days or weeks as an almost vertical uptrend appears.

But a lot depends on the duration of the trading range from which the breakout occurred, because this can provide an indication of the strength of the breakout. The longer the duration of the trading range, the more significant the breakout.

For BRK.B it took nearly six months to form, and six months is considered a long enough time for an explosive breakout. And after the stock broke out, it immediately filled the gap and did a back test of the pattern.

Shine Up Your Portfolio With 3 Top Metal Stocks

2010-01-13T19:53:41Z

Shine Up Your Portfolio With 3 Top Metal Stocks

As we enter 2010, metal commodities like platinum and palladium are hitting new 52-week highs and breaking out of new chart patterns. Oddly enough, gold is one metal that hasn't reached new 52-week highs in the new year, but if you're familiar with me, you know I think gold is the No. 1 sector to invest in for 2010. And many of the best gold stocks are making new highs even though the actual metal currently is not.

In short, this is going to be a huge year for metal commodities and metal stocks. Now I can't cover all the metal sectors in this update, but I want to highlight a few of the main ones for you, namely platinum, palladium and copper. What's more, after I review these sectors, I'm going to give you three of my top metal stocks. These are the names I think the big money is going to go after first -- and you want to get in before they do!

You Can Now Follow Me On Twitter!

2010-01-11T21:26:27Z

I do everything in my power to give you the best and most-useful information available on hot stocks and market trends......you can now follow me on Twitter!

Link

A Second Chance to Trade One of 2009's Best IPOs

2010-01-11T19:56:30Z

A Second Chance to Trade One of 2009's Best IPOs

SolarWinds Inc. (SWI) may sound like an alternative energy company, but it actually makes application software. The company went public in May 2009, at $12.50, and has returned 84% since then, making in one of 2009's hottest IPO stocks.

Trading IPOs can be an exciting way to make huge profits. SWI is a great example of that. But it's also a great way to lose money. IPOs often trade erratically, and since the stock has no trading history, it is impossible to predict where it will trade next.

Sure, you could get lucky, like SWI investors did, but you could also be left holding the bag when the party is over if the stock heads south.

So, when trading IPOs, I like to wait until I can accurately predict their next move using technical analysis. This way I can time my entry and exit points to maximize my gains and get out before the party is over.

What is SWI's chart telling us right now? It's saying we are being offered a second chance to trade one of 2009's hottest IPOs.

SolarWinds Inc. (SWI) Trade

The stock has formed a cup-and-handle, a pattern similar in appearance to a coffee cup with a right-side handle, which indicates the potential for an uptrend.

This pattern is an elongated U-shape followed by a short period of consolidation of one to two weeks in duration, which tends to be downtrending. When the stock's price ascends outside of the trendlines, a breakout is likely to occur. If the price ascends beyond the upper right side of the cup, then the pattern is confirmed, particularly if it is accompanied with a sharp increase in volume.

5 Gold Stocks Set to Double in 2010

2010-01-05T03:15:47Z

This Is Your Second Chance in the Gold Sector

Where will some of the biggest profits of the year come from?

Gold stocks. That's right, gold is the No. 1 sector to invest in for 2010.

Gold has risen for nine years straight -- not a single year of negative returns! Do you know of any other asset class that can make that claim? And this year will be no different.

So, while I'm sure there are plenty of you out there kicking yourself for missing the gold run in 2009, you can stop beating yourself up over it now. Because the profits to be had in this sector will blow last year away, especially if you invest in the following five gold stocks that I think will double (or better!) in 2010.

The No. 1 Sector to Invest in for 2010

2009-12-28T16:24:04Z

My last update on gold, which I wrote toward the end of November, was titled "Why You Do NOT Want to Invest in Gold Now." At the time, I was bullish on gold long-term, but issued this warning because all of my charts, indicators and oscillators showed gold and gold stocks at extremely overbought levels.

Gold did sell off in December, managing to work off all those frothy levels, but we have now entered the second leg of the mega rally in gold that will last for all of 2010 and into 2011.

Keep in mind that this is my longer-term view on the sector, as opposed to my typical short- to medium-term updates, which you have seen throughout 2009.

Your Second Chance in the Gold Sector
If you missed the gold run in 2009, then do yourself a favor and join the party in 2010. Don't miss this next run up, because the profits to be had in this sector next year will blow 2009 away.

As I've stated before, gold has risen for nine straight years without a single year of negative returns. (Do you know of another asset class that can make that claim?) And next year will be no different. And gold is not, I repeat NOT, a U.S. dollar story. Gold isn't rising in the dollar alone. It's hitting new highs in every currency around the globe. And not all the world's currencies experienced a complete freefall like the greenback.

The daily chart of gold below shows a symmetrical triangle breakout and parabolic run up that I brought to your attention in August.

Double Your Money With This IPO BPI

2009-12-17T12:08:41Z

Online education stocks continue to outperform the overall market. Just look at the sector's performance (blue line) versus the S&P (500) (grey line) during the past 18 months.

Bridgepoint Education Inc. (BPI)

When trading IPOs, I think the best approach is to trade the secondary reaction versus the "out-of-the-gate" reaction, because it allows us to use technical analysis.

As you can, see from the chart above, BPI is in a very large bullish symmetrical triangle. The stock looks to be on the verge of a breakout, but has experienced some volatility this week because of other less desirable stocks in the sector. But that just means we can get in at an even better price. BPI closed today at $ 15.25.

When it comes to IPOs (and all stocks really), we only want to trade the "best-of-breed" stocks, and that's exactly what BPI is. With a growth rate of over 64% year-over-year and this bullish chart pattern to boot, you have to love the potential of this stock.

My target is for a double on this stock over the next year, but in the intermediate-term, a move to the mid-$20s looks likely. And, great news, BPI trades options, so use them to leverage that move up and you'll be feeling pretty smart indeed!

IPOs are Back in Full Swing

I hate to say "I told you so" (oh, who am I kidding?) but I said months ago that IPOs were coming back in a big way.

So I will continue to bring OptionsZone readers the best ones, just like I've done with DigitalGlobe (DGI) and LogMeIn (LOGM). Both made new 52-week highs after my buy alerts, which you can review here and here.

Oh, and have you seen what's happened with Talecris Biotherapeutics (TLCR)? The stock took off running after I recommended it in late November.

And my first online education IPO pick, LOPE, also looks ready to explode.

IPOs are back and they're hot, hot, hot! So take a look at BPI now, and be on the watch for my next IPO recommendation.

Below is a chart of Bridgepoint Education Inc. (BPI), which went public in April at $10.50.

A Stock That's Good as Gold ... Better, Actually

2009-12-07T16:13:31Z

A few weeks ago, as gold was making new all-time highs, I warned investors that it was not the opportune time to invest in gold stocks. I foresaw a correction, and I was right.

Gold sold off last week, in part due to better-than-expected unemployment data and the Fed saying it believed inflation will remain "subdued." And gold stocks followed the metal down.

Now, don't get me wrong. I am BULLISH on gold in the long term (and I think it's almost time to go long gold stocks again). But I didn't think you'd want to weather the pullback I saw coming.

That said, there was one gold stock that actually closed up on the week: Northern Dynasty Minerals Ltd. (NAK).

There's something to be said for a stock that hangs tough in a market as volatile as the gold sector and even outperforms the actual metal!

So while gold might see some more consolidation in the short term, NAK should hold up just fine.

In fact, it should do a lot more than just hold up, as it's about to break out of a bullish ascending triangle pattern.

An IPO You'll Be Thankful For This Holiday Season

2009-11-25T12:49:06Z

An IPO You'll Be Thankful For This Holiday Season

Lately, I've been talking a lot about the hot IPO market, and today I want to tell you about the next great IPO trade.

Talecris Biotherapeutics (TLCR), a biopharmaceutical company that specializes in plasma-derived protein therapies, went public on Sept. 30, raising a whopping $950 million.

In early November, the IPO received a slew of upgrades:

*Barclays Capital initiated "equal weight"
*Citigroup initiated a "buy"
*Wells Fargo initiated "outperform"
*JPMorgan initiated "overweight"
*Since it began trading, the stock's chart has formed a bullish cup-and-handle pattern.

The pattern includes an elongated U-shape followed by a short period of consolidation of one to two weeks in duration, which tends to be downtrending.

The pattern is similar in appearance to a coffee cup with a right-side handle, and indicates the potential for an uptrend.

If the price ascends outside of the trendlines, then it has the potential for breakout. If the price ascends beyond the upper right side of the cup, then the pattern is confirmed, particularly if it is accompanied by a sharp increase in volume.

Your Next IPO Winner Here

2009-11-09T16:20:18Z

Satellite imagery provider DigitalGlobe (DGI), which went public in mid-May, was the fifth U.S. IPO in 2009, and is part of a larger and very exciting trend in the IPO market.

With Morgan Stanley (MS) and JPMorgan (JPM) as lead managers on the deal, the company raised $279 million by offering 14.7 million shares at $19, which was above the proposed $16 to $18 range.

DigitalGlobe is a leading global provider of high-resolution satellite imagery for defense and commercial applications, such as Google Maps. According to the company, "With advanced collection sources and a comprehensive ImageLibrary containing more than 730 million square kilometers of imagery and imagery products, DigitalGlobe offers a range of online and offline products and services designed to enable clients to access and integrate imagery seamlessly into business operations and applications."

That's a nice little niche, but if you're familiar with me, you know that I like to trade best-of-breed IPOs with in-demand products or services, using technical analysis as my guide. (If you're not familiar with my IPO trading strategy, I suggest you take a look.)

IPOs are Back! Hot Company, Hot Sector, Hot Chart

2009-10-26T10:48:56Z

LOPE About to Break Out

This is all great stuff that points to LOPE as a best-of-breed fundamental play, but as you likely know, I'm a technical guy. And I'm happy to say that LOPE is setting up nearly perfectly from a technical standpoint.

LOPE's chart is following all the rules of a bullish ascending triangle pattern, which is confirmed when the price breaks out of the triangle formation to close above the upper trendline.

My first target for LOPE is at $25, and my second is at $29 over the next three to six months. With the stock currently trading around $18.50, if you bought shares of LOPE, you'd be looking at a return of 35% if it hits the first target, and 57% if it hits the second.

That's nothing to scoff at, but like I said in my earlier article, the way to trade IPOs for the biggest percentage gains and the least amount of risk is through options. And with the technicals showing that LOPE is very close to breaking out, you should act now by buying call options on the stock.

In selecting what LOPE call options to buy, consider whether the target price is sufficient to provide adequate returns after your costs (such as commissions) have been taken into account. A good rule of thumb is that the target price must indicate a potential return of greater than 5%.

But whichever calls you plan to trade, you should do it soon, because it doesn't look like you're going to have a big window of opportunity before LOPE goes screaming higher.