Healthy Pause For Harman International (HAR)

Posted by barkand on January 25, 2012 under Classic chart patterns, xattascope | Be the First to Comment

Harman International (HAR) is now in a classic technical setup.

On the daily chart below, we see Harman hitting lows along with the rest of the market in early October. Then prices shot up to a high of $44. Since then, it has spent three months forming a base. Some would call it a “coiled spring”. Others might see a “lumpy” cup-and-handle pattern. In either case, it is a bullish development for HAR. And now the shares are once again at $44 and drifting sideways to down on diminishing volume over the past three days. This is exactly the behavior we want to see if prices are to continue higher.

Let’s take a closer look at this base through the xattascope, to be sure the market is not tricking us.

On this hourly chart, we see that the leveling off of prices has been accompanied by quiet accumulation. Once it reached the $44 level every burst of volume pushed HAR higher, as noted on the chart. The bulls are clearly interested in snapping up more shares any time the price drifts a little bit lower.

We expect HAR shares will resume their uptrend before the week is over – possibly as early as today.

Hiding Under Rock, Solar Stocks Found

Posted by barkand on January 19, 2012 under Classic chart patterns, Volume, xattascope | Be the First to Comment

Traders and investors rediscovered the solar energy industry last week, after shunning anything solar in 2011. The charts look similar for almost any stock in this industry, or even ETFs like KWH or TAN. But here we will look at JA Solar (JASO) as one which is representative of the group.

The most prominent feature on the weekly chart below is the cascading bear market covering all of last year. It got so bad that JASO took out its March 2009 low. But if you look more closely you notice that, late last year, the stock began making lows well within the Bollinger bands instead of sliding down the lower band. You rarely see a stock spend an extended time hugging the lower band and then launch into a bull market. This intermediate step of a low within the bands is usually necessary.

Another thing to consider here is that while JASO made a big move in percentage terms in the past week, it has barely made a dent in recovering territory lost last year.

Now let’s look at JASO a bit more closely and see whether this was a healthy breakout or not. With our xattascope, we will examine a 15-minute chart stretching back five days.

What we want to see is heavy volume on the original breakout followed by steadily decreasing volume as the base is formed, And that is exactly what happened. Even in yesterday’s push above $2 you can see that the move was accompanied by a good amount of volume. And, more generally, the fact that JASO broke out of this new base so quickly tells us that the market is eager to buy more.

Where does it go from here? One popular – if arbitrary – method of making price projections on bull flags would say the next stop should be in the $2.30 – $2.40 area. That also happens to be where some minor congestion appeared during a failed rally in late October.

Express-1(XPO) Stopping For A Rest

Posted by barkand on June 27, 2011 under Candlestick charts, xattascope | Be the First to Comment

Shares of Express-1 Expedited Solutions (XPO) absolutely exploded higher after an announcement that a private investor would be making a substantial investment in the company. In a little more than a week the shares moved from $2.19 up to $3.48 (that’s 59%). The price now sits at $3.13.

A look at the charts is telling us that the first burst of enthusiasm is now finished. Here’s why:

1. Last week there was not one, but two, cases of the bearish “dark cloud cover” candlestick formation.
2. Volume is drying up. It is especially noticeable last Thursday (the second-to-last candle on the chart below) when prices covered a huge range but on little volume.
3. Prices had been at or above the upper Bollinger band, but the current price of $3.13 is now quite far from the still-rising upper band.

If the rally is over, what happens next? We expect prices to stop and rest in the $2.90 to $3.00 range. That would be 5-8% lower from here. It is the same range where it got stuck last winter. And if we turn on the xattascope and look more closely at the latest two weeks of hourly data, we see that this is a region where prices spent a considerable amount of time.

Net1(UEPS) May Have Found A Bottom

Posted by barkand on May 11, 2011 under Bollinger bands, Candlestick charts, xattascope | Be the First to Comment

Net1 (UEPS) has been in a severe downtrend, losing one-third of its market value just since the beginning of the year. However, the last three trading days strongly suggest that the bottom is in for UEPS shares.

The dragonfly doji on May 6 followed by higher closes the next two days is a strong signal that the market has changed.  When you add in the strong volume on all three days, it makes the situation look that much more positive. [ By the way, the spark for the change in sentiment was an earnings report - the company reported a loss.]

We were curious about that dragonfly doji, so let’s take a look at it under the xattascope. Below is a 15-minute chart covering the last five trading days. The initial selloff following the earnings release was not a matter of a few panicked trades. It lasted more than half an hour, pushing the share price far below the lower Bollinger band. Notice how the market caught its breath around noon New York time and started moving higher. When prices make a bottom within the bands after making a bottom outside the bands, it often leads to a trend reversal.

And what should we do now? In this case, we can advise a 3 step approach:

1. Nibble a bit now.
2. If UEPS can close above its 20-day moving average, buy some more. Notice that the shares were repelled from it yesterday.
3. If the 20-day moving average turns up and the price action is still positive, you can add to your position.

Bearish Signals For U.S. Steel(X)

Posted by barkand on February 20, 2011 under Bollinger bands, Candlestick charts, Cartoons, xattascope | Read the First Comment

Not long ago, we referenced The Simpsons in our analysis of food manufacturing and a food retailer. So today we turn to another Matt Groening creation, Futurama.

Leela: You’re blackmailing me?
Bender: Blackmail is such an ugly word. I prefer extortion. The X makes it sound cool!

Today we look at U.S. Steel, with its very cool ticker symbol – X. Our story begins in the autumn of 2010. In late October, volatility subsided resulting in a squeezing of the Bollinger bands. The width of the bands was the smallest in more than 6 months and this development frequently leads to big moves in prices. As often happens, X first went the “wrong” way, then turned around for a powerful 30% advance over the next two months.

Prices then moved sideways for six weeks, and then on February 15 gapped up above resistance at $61. Unfortunately, the price action that day also formed a shooting star, a bearish sign. Two days later, prices formed a hanging man which, as you can guess, is also a bearish sign. The hanging man was confirmed the next day, with a close well below the previous day’s close.

But is it really so bad? Let’s take a closer look at X under the xattascope. On the hourly chart below, we see that on the gap day the stock was actually heavily sold after its initial burst in the morning. And then on the day that the hanging man was formed, there was a feeble, low volume rally.

So, yes, we feel X is headed for a short-term downtrend. Of course QE2 is keeping everything afloat, so maybe X finds support around $60 before eventually climbing higher. But if the price action around $60 is not favorable, there will be lower prices still to come.