Below are charts which have either been requested on my contact page, discussed in our live chat, or are on my watch list. You will notice many are energy-related as greener fuels received a boost after President Obama’s speech today. I expect this should continue into Thursday with a possibility of a pullback (general market pullback) on Friday if the Jobs report does not meet or exceed expectations. If the jobs report does not send us lower, it could very well be news surrounding the debt associated with Spanish banks. We will continue to hear more about Spanish banks this month. Now, let’s get to the charts.
GoIp Global (GOIG)
A/D Line: Long trend south, bearish
ADX: Recently signaled sell but in a weak trend and can change quickly
CMF (21): Bearish since mid-April
MACD: Strong downtrend with no sign of leveling off yet
OBV: Confirmed the PPS move south, confirmed bearish
RSI: Recently touched oversold territory
Analysis: The chart is clearly broken. All indicators are currently bearish. Since we are under the bottom Bollinger Band, I anticipate we could see some sideways action over the next few days which could be good for very fast and experienced traders. The RSI is oversold however because the other indicators are so bearish, we cannot take the oversold RSI as a buy signal just yet. I would keep an eye on the A/D line. If it starts an uptrend, this could be the first sign of GOIG turning the corner. The ADX is in a weak trend so it can easily reverse to a buy signal. However, watch the MACD to confirm it is not a fake signal. The one trump card on all these indicators is a huge influx of volume. I cannot imagine seeing many high volume selloff days left so we could see a high volume buying day which would quickly change many, if not all, of these indicators to bullish. For now, I’m letting it fall where it may but will be watching closely for possible long trades.
Encorium Group (ENCO)
A/D Line: Long trend south, bearish
ADX: In a weak bullish trend
CMF (21): Bearish since the beginning of April
MACD: About to give a buy signal if it stays on current path
OBV: Did not confirm any of the moves south meaning they are not likely strong sells, bullish view
RSI: Neutral territory, closer to overbought territory
Analysis: ENCO is a tricky chart. The A/D line and CMF (21) both trended south (very bearish) while the PPS moved north. The ADX signaled buy right before the significant move up in April but it should be noted that the trend has weakened since. The MACD could be the key indicator for ENCO as it is about to give a buy signal if it stays on the current path. This could be the leading indicator for the rest or it could be just a fake signal which could trap some. However, the strongest current indicator is the OBV line. During the entire PPS fall, the OBV never confirmed it meaning the selling was never strong. You can also view this by seeing the low volume days while the PPS was falling.
ENCO shows why you need multiple technical indicators when reading a chart however you need to make sure you do not use too many as they may start to create confusion. This stock greatly interests me and I will closely monitor it for a buy signal as a few nice volume days could really send this stock towards $6.
Gastar Exploration (GST)
A/D Line: Strong uptrend, bullish
ADX: Weak trend with last signal being a sell
CMF (21): Recently positive but weak
MACD: Recently signaled a buy
OBV: Confirmed all the recent PPS moves, recent move was bullish
RSI: Neutral territory just leaving oversold territory
Analysis: GST is a natural gas play I am currently trading since I anticipated President Obama would start hinting towards cleaner fuels with this oil disaster. He did that today during his speech and fuels greener than oil saw a nice boost to end the day. The strong accumulation in GST is very bullish (A/D line) and a few nice volume days could quickly change the ADX to a buy signal. The MACD recently signaled buy and this could be the start of a nice move north in the PPS. The RSI gives plenty of room to run. I am very bullish on GST as natural gas is becoming embraced due to the BP plc (BP) oil disaster.
NGAS Resources (NGAS)
A/D Line: Long downtrend, bearish
ADX: Relatively strong bearish trend that is showing signs of moving towards reversal
CMF (21): very bearish, .5 in either direction signals very strong. In this case, it is bearish
MACD: Recently signaled a buy
OBV: Confirmed all the recent PPS moves, recent move was bullish
RSI: Neutral territory just leaving oversold territory
Analysis: NGAS has some potential if you are quick to move. Similar to ENCO, NGAS has conflicting indicators which only tells me that any move north might not be sustainable so you will need to pay attention closely and not be afraid to sell. The natural gas sector could assist in taking this stock higher for some very nice profits but be careful not to hold too long as it could be very volatile.
Metrogas (MGS)
A/D Line: Mostly flat with a very slight downtrend
ADX: Buy signal was last week but in a weak trend still
CMF (21): Mostly flat with no true direction yet
MACD: Signaled a buy today
OBV: Did not fully confirm move up today, could be volatile
RSI: Neutral territory, closer to oversold territory
Analysis: MGS is another energy play which could see some short-term bullish action. The MACD signaled a buy today which could be the leading indicator before the rest confirm. The RSI gives plenty of room to run and I would feel more confident if the ADX line trends above 40, with the green line above the red line, indicating a strengthening bullish trend.
Jones Soda (JSDA)
A/D Line: Negative but showing uncertainty
ADX: Strengthening bullish trend but still considered weak trend
CMF (21): Recently positive but not strong, over .5 is considered strong
MACD: Strong bullish trend
OBV: Confirmed move up
RSI: Overbought territory for past two days.
Analysis: JSDA has very high volume, which is helping it surpass some of the overbought indicators. Being above the top Bollinger Band and having an RSI about 70 is considered overbought territory. However, per the Finra site, we have seen about 50% of the shares over the past two days as being shorted. I do not like the A/D line falling today either. Unless we see more very high volume days, the shorts could start to mount an offense any day now and the buyers could step aside and take profits. We successfully traded this stock in the live chatroom today, as many of you were a part of, but I did not hold my position overnight. I will wait to see what happens in the morning to see if the bullish trend will continue or if the shorts look like they can mount an offense anytime soon. A strong volume day could see the shorts being squeezed and having to cover until they can find a different level to mount an offense at. The shorts will mount a successful offense. The only question is at what PPS level will that start at. Make sure you use the level 2 quotes on this stock as it will help you see the bid support, or lack thereof.
As always, do your own homework to see if you agree. Chart reading is an art, not a science. The general market or significant news can quickly overrule these indicators. If you would like to see another chart analyzed, request it here. Have a good night and see you in the live chat come morning. Good luck out there.
Mike
At the time of publication, Kudrna was Long GST but positions may change at any time.
