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richard
Now I don`t typically trade small cap stocks, but TIM pointed out a pretty nice set up in his most recent article here. CNEH is setting up for a perfect breakout, it closed right at its high of $4.65. This stock is likely to pop on strong volume and seeing as it closed at its high, it`s not too late to get in. Traders have the entire weekend to spot this breakout, so a massive move is probable. Also, keep in mind that this is an OTCBB play, executions are slower. For more on this play, take a look at Tim`s Why I Bought A Stock With The Most Perfect Setup-Technical and Fundamental-I`ve Seen So Far In 2008 post, but for the time being here`s a chart…
So you’re probably wondering why I plan to take a long position after months and months of talk that this market is still in a downtrend. Well although this position is to the long side, I plan to daytrade it. The S&P500 is due for a relief rally, it is oversold so a bounce to the upside could happen as early as Monday. This is the chart I posted on June 26, 2008:
So I illustrated a failed bullish formation on the 26th, but let me show you what I’m seeing now…
Instead of a failed falling wedge a larger falling wedge formed on the S&P. Further, we ended the week at 1278 which happens to be support. In March we had a double bottom here, so this is an important level. I mentioned on the 26th that we should move sideways from here…but who are we kidding? A move up or down in this volatile market is more likely. The technicals lead me to think that we’re headed higher. A falling wedge is a bullish formation, and again we are sitting right at a major support level. Further downside Monday morning may occur, but I’m expecting a turnaround by noonish. After making some good profits, I have been stopped out of all my shorts…so I am now more neutral than bearish. I often reply to my articles with updates on the current market situation, so make sure you read those comments and reply to them. Oh and if you haven’t already, feel free to subscribe to my feed or newsletter. I will let you all know when I think the next leg down will be, have a good weekend and happy trading to you all 
Richard
richard[at]hedgeagainstspeculation.com
June 30th, 2008 at 10:01 pm
[…] It closed at $5.34 from its previous close at $4.65…that is a 69 cent break out, a significant one for a small cap stock. So I hope some of you profited from this because I sure didn’t! I did put in a fairly large order on the weekend but my order was for $4.70. It opened at $4.75 today so my buy order was not processed. I did write in my previous post that OTCBB executions are slower, so setting the buy order so low was a costly mistake. On a more positive note, I’m having a very profitable month. According to newsday.com this June has been Dow`s worst June since the Great Depression so if your account is up this month, you should feel very good about your trading. Anyways, not much has changed in the markets since my last post, so if you haven’t read it you can find it here :) […]
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