Quick Update on Stock Position Trades

ZLCS ran all the way to 2.25 intraday, however, I wasn't watching it during the day and missed any opportunity to lock in a profit. It subsequently reversed and closed lower. This is very bad price action for a breakout and I will be selling ZLCS tomorrow on any weakness. It will be about a 7% loss. UCO alternatively is acting very nicely and I plan on staying long this for some time.

Oil and Drug Trades

I'm long a couple position trades. After stalking oil for awhile I put a buy stop for UCO the oil ETF in at 29.75 a share a couple days ago. I got filled on UCO and am now long. I'd like to keep this on for weeks. I also bought ZLCS a pharma company. I got filled in the 1.90s a share. Couldn't have asked for a better print on the day. A nice hammer. I expect this to run a lot after it hits over 2.00.

Anatomy of a Classic Short Setup

One predictable chart pattern to short sell is an over-extended run followed by a red (loosing day) that prints a shooting star candlestick. I circled the shooting star in the chart. By an over-extended run I mean a stock that gains over 50% or more over about 5 days. The classic setup is when it moves that much and also finishes above the upper bollinger band. A breakdown from the previous days low is a great short sell entry. CDTI was an almost textbook example of such a setup.

Crude Oil

I have a buy stop set for Powershares Ultra crude Oil UCO at 29.75.



disclosure: no position in CDTI

Crude Oil Commentary: Bulls in Charge

To start I will do a recap on some of the stocks I've posted on lately. One that continues to surprise is Plug Power PLUG. I posted it when it was around $1.75 a share. It printed $4.90 today! ETRM followed through too. Interestingly enough Delcath Systems DCTH bottomed out around net current asset value.

Now on to crude oil. There is a long setup now as it is back on trend support. When it comes to crude we have to be bullish right? For starters there is the inflation piece. Over decades the majority of oil's gains are attributed to inflation. Will there be inflation short-term? I definitely believe so. With more dollar debasement on the horizon I think inflation is more likely here than deflation. Let's even say one drinks the FED's Koolaid and would rather go on CPI, M1 or M2. Still looks like inflation to me. Unemployment is down and the economy is a little better. So I think the fundamental bullish case is sound and the long setup is here again in the charts.

We are back on trend support folks. It will be interesting to see how the price acts around trend support here but this is still a long setup whether the signal fails or not.

Now a slightly longer-term chart. You can see the rock solid support. Vehicles to trade oil include the futures outright CL, ETF's USO and USL. USL has longer contracts so there is less decay than USO.

disclosure: no positions in any stocks mentioned

Some Quick Charts: Metals etc.

Last week the high beta stuff was back in play. The rare earth elements and metals. Oh, and don't forget the shippers. If I've been right about anything lately it was that the shippers had bottomed. DRYS is very correlated with the index. It's a good one. One of the stocks I've had my eyes on lately is former net-net Infosonics IFON. The stock is usually very thin but a few days ago I noticed it was in-play as the volatility and volume suddenly appeared. So it's no longer in net current asset territory, however, it's moving lately. They got a notice of failure to maintain the Nasdaq'a minimum price per share above $1. Other than that I don't know of any significant news around the time the surge began.

Another flag is starting as it consolidates from that huge run the other day.

ENG is consolidating and this looks like a long flag here. The stock is up so much over the last 6 months that it seems like buying would be chasing. This is just such a perfect flag here that any break above it could get some good follow though I would imagine. We'll see though. ENG has a nice balance sheet.

Tasman Metals TAS is a junior resource company engaged in the acquisition and exploration of rare earth elements and tungsten in Scandinavia. TAS has a great chart going. It's in a nice slow uptrend and just tested trend support and held on volume. This is going higher. Over 1.10 soon.