Category: divergence
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Today’s Entry: DIG
I entered DIG today. The stock has broke out over a W formation and the 50 day moving average. Another positive is the positive RSI divergence. An entry here around $34.80, with a stop at $33.80 (under suppport) and target at the old high around $38 offers a nice 3:1…
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Apple is a Tough Read
If it were any other stock, I’d take a stab at shorting AAPL right here, right now. Technically, it shows signs of losing steam and is a good “pioneer short trade.” We see negative divergences in both RSI and Stochastics. Price is making new highs while the two indicators are…
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The Short Apple Setup
AAPL is showing a negative divergence and is extremely extended at new highs. I am short with a tight stop.
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Trade: USD
I took a position in USD today. Price has held up well and is at a strong support level. Notice the positive divergence in OBV compared to price.
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Chart: DIG
There’s a lot to like about the DIG chart: 1. Postive RSI divergence 2. Successful test of bottom support 3. Long tail price bar at support 4. Oversold stochastic turning up 5. Strong obv and volume action
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Holding the Lows
The lows are holding. My game plan is to hold my current positions with stops in place below the lows. As long as the lows hold, we are still within the “bottoming range” formation and just experiencing a retest. The chart below is not annotated, but note the RSI divergence.
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DUG Divergence
Take a look at the DUG chart below. Notice that RSI has made a higher low while price action has made a lower low. The ETF, which is short oil and gas, is also extremely oversold. I took a small position this morning.
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Are Steel Stocks Ready to Rollover?
It has not been wise betting against steel stocks, but there may be a low risk short setup forming. Let’s take a look at the chart of AKS, which is representative of many steel stocks (MTL, ZEUS, X). The first thing that concerns me is that RSI has made a…
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Do I Have the Guts to Buy Financials?
I’m scared as hell to buy a financial, even with a small position size. However, if I didn’t know the name of the company behind this chart (Morgain Stanley), I would be buying. We have price breakout over the 50 day moving average after the stock printed a bottoming long…
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Saturday Review: Shorting Momentum Stocks
This post from August 2007 offers some timely advice on shorting momentum stocks: Those of you familiar with my trading style know I rarely short high flying stocks. While it seems logical to go against a stock that is overextended, this type of trade generally takes on too much risk.…
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A Low Risk, Risky S&P Trade
I bought 300 shares of SSO at $62.23. SSO is 2X long the S&P 500. You may be wondering why I would go long an index in a downtrend, which I rarely do. The answer is quite simple. I am getting a low risk entry on a risky trade. Huh?…
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A Bullish Divergence in AAPL?
Frequent e-mailer and one of my most loyal readers, Hal B., asked about a bullish divergence setup in AAPL. I don’t have annotation capabilities from my current locale, so bear with me as I explain the chart. I do see a slight divergence that might be used for an extremely…
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Is the Market Speculator Really Long a Homebuilder?
I’ve been very busy, so I haven’t had a chance to update my trades. As stated in the comments section this morning, I unloaded a bunch of shorts and entered a few longs. I would like to add some more shorts on bounce. My bias is still to the down…
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Chart: TOL
As noted in the previous post, I took a position in TOL today. Those familiar with my trading style know I don’t tend to buy downtrending stocks. However, I noticed some mean looking divergences that lead me to believe their might be some institutional buying at the current levels. At…
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Shorting Momentum Stocks: the GRMN Trade
Those of you familiar with my trading style know I rarely short high flying stocks. While it seems logical to go against a stock that is overextended, this type of trade generally takes on too much risk. Stocks tend to trend longer than they “should” due to market psychology and…
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Google Forming a Negative Divergence
While GOOGLE (GOOG) made my long position trading watchlist (entry at 50 day moving average), I could not help but notice the startling RSI, OBV and stochastic divergences that have formed at the current new highs. For those who don’t know, a negative divergence forms when price increases while the…
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Today’s Trades: GMRK, EWZ and AAPL
Yesterday, I sold 200 shares of AAPL at $108.25 (entry at $101.25) for a $1400 (+6.9%). I had moved my trailing stop when the stock hit $110. I have a feeling a long tail is going to print today, followed by another move up. I hope I didn’t sell too…
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Breakout Chart: XOM
Exxon Mobil Corp. (XOM) broke out to new highs on above average volume. A low volume pullback to the prior highs, just under $79, would normally provide a good entry point. While the breakout is bullish, there are some concerns for this stock. Notice the negative divergences in both RSI…
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Deja Vu
EWO, an Austrian ETF, is looking eerily similar to the way it looked at this time last year. The stock had broke out of a base in late ’05, pulled back to the breakout point, and made a move in early ’06 that measured 6 points from breakout. A negative…
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New High Failure Trade and AAPL
One of my favorite short plays is the “new high failure” trade. There are three elements to this trade: 1) That stock makes a new high2) RSI peaks at a lower level than the previous high3) Take a short position if and only if the stock dip below the previous…
Paul J Singh 