With an uncertain market, it is tough to build long positions with confidence.  The psychology of the market is very irrational and swinging up and down with ease.  Even on down days though, pockets of strength typically exist.  The challenge is finding something to believe in, even if it’s just for the intraday.

One strategy is to search for high volume stocks that are in the green on the day.  After you have a list, quickly analyze the charts to find something of interest.  The key is to not force any action in a weak chart, make sure you actually like the chart.  Don’t just think that because it’s a better chart than the rest, you should play it.  Some days you will not be able to find a good chart, especially on a bearish day.   However, if you look hard enough, you may find a few enticing ones.  These below are not bad at all right now.

Jones Soda (JSDA)

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A/D Line: strong move north, reset, than move up again

ADX:  still in a buy signal until red line crosses green line

CMF (15):  positive all day, greater than .5 is very bullish

MACD:  positive but leveling off, could be first signal of bearish trend

OBV: confirmed the PPS move north, good sign

RSI:  In neutral territory, neither overbought or oversold, over 70/75 is typically reaching overbought territory

Analysis: As long as the ADX continues its strong uptrend with the A/D line north and the OBV confirming each move, JSDA could work higher, especially with strong volume.  Make sure it stays within the Bollinger bands before you try to buy as every time it moves above the top band, expect a pullback soon.  If the RSI moves over 75, it could become too risky to buy as that’s in overbought territory so be wary of adding to your position.  Support growing around $1.50 but hasn’t had enough time to be considered a true support line yet….Needs more sideways action with good volume to be considered a strong support line.  Many in our Live Chat called this stock last week but unfortunately I was not one of them who added this position.

Gastar Exploration (GST)

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A/D Line: flat but in positive territory.

ADX:  a buy signal may come soon once the green crosses the red

CMF (15):  about 50/50 on the day with it recently moving north

MACD:  a buy signal once it crosses positive…could be very soon

OBV: still moving north even as the stock price falls meaning the selling strength is very weak and could be oversold already

RSI:  barely in oversold territory testing neutral territory.

Analysis:   The OBV line signals we could see upside potential soon and I added to my position today.  Based on my thesis that Nat Gas should receive some buyers as Obama is likely to back Nat Gas sooner than later while he keeps pressure on deep sea oil drilling.  The A/D line moving north is very important so pay close attention that it doesn’t downtrend significantly.  I will look to add when the ADX line signals buy and the MACD confirms it.  If these signals do not come, we could see more downside pressure and I will hold off on adding.

As always, do your own homework to see if you agree and join our live stock market community chatroom if you have questions.  Good luck out there.

Mike

At the time of publication, Kudrna was Long GST but positions may change at any time.