Oil Technical Analysis

Crude oil has really been trading well on technicals lately. It's actually been trading on technicals to the T. So easy to read the important spots. Here is an older technical trade set-up on oil that turned into a good trade for me.

I was actually going to post this a day ago the night before the beating it took yesterday. Sorry about that. Anyway, I actually missed the trade because I wasn't watching oil.

The first circle on the left is a somewhat weak shooting star candle. Just means sellers were particularly strong by the end of the day. Buyers were not in control. The significance was it was at the peak of price resistance. Next circle. Big doji right at resistance. Very bearish. The doji means there was a battle between buyers and sellers and it reflects major indecision in the marketplace. When a doji occurs at the extreme end of a trend it often indicates a reversal in trend. I noticed going back a lot of months a doji was a good signal of an earlier trend change to. Both of these clues taken together leads the chart to read more downside. It definitely happened after that doji. Yesterday was a huge drop. That day isn't on this chart but USL closed at 35.50. I think oil finished at 62 a barrel.

Also, if you are going to go long on oil for a longer term trade from what I understand USL tracks better than USO because of the way they rollover the contracts.















disclosure: no position USL

Dow Jones Index Technical Analysis

I pulled out a longer term chart of the Dow and there is what looks like a potential rounding bottom formation and failed signal on this last breakdown. Both of these are bullish. The fundamentals are hard for me to get a hold of here on a lot of stocks and the economy. I'd say stock prices are more likely to be overvalued fundamentally. I also strongly believe we will be in a range-bound market for many years. I'd be very surprised if we saw new highs on the indices anytime this year or next year. I'd actually be scared because I fear what the next crisis will be like. I think the economy and stocks should have cooled off and consolidated with the savings and loan crisis at the least.

All of that totally conflicts with the current market forces that are driving stock prices higher. I don't think market forces are always intelligent but using technicals can give me a better read on the short and mid-term direction. I don't have much experience with the indices technically so I'm treading pretty lightly here. One type of bottom formation is a rounding bottom. It looks very similar to the long term chart on the S&P and Dow. Confirmation would be about 10,000 on the Dow.






























I like this next one the most right here. We were stuck in that range from May until just recently when it looked like the market was going to breakdown. The arrow points to that move. We actually did make a new low there below the chop. Then those sellers and skeptics got wiped out as the market forced them higher and prevented a breakdown. That was the failed signal. What that means is the strength here is very strong. If it can't go lower we can only go higher technically. This is beginning to be confirmed as new highs are being made out of this range signaling more upside potential. If we hold these highs or retest and run there could be much more upside in this rally. Really though, a no brainer time to go bullish and get long was when the failed breakout pushed above the trend support line. I didn't even think about the failed signal because I was expecting more lows and didn't flip the picture around which this chart says to do.

Top Short Watches

Congratulations to anyone that saw my Twitter post that GAEC was going to tank. I put that alert up a couple days ago before the annihilation when the stock was at $2.20s. The stock crashed today to $1.10 and closed at $1.60.


These are some of my top short watches.














FRZ sells ice cubes. See a pattern here?














Newspaper company.














Another newspaper














Yet another






























full disclosure: no positions

Festival of Stocks at Modern Graham

Check out Modern Graham and the festival of stocks for some investing articles. My post I did on IFON and LDIS is there. I just took off my IFON for a gain of 20%. Post coming up on that and on my 2009 net-net performance.

Net-Net IFON Trade

I'm glad I learned technical analysis because it really helped me out with IFON. Actually, the way it is going right now it may have been the difference between a nice gain and tiny profit or loss. I used that red trend line(in my platform though) to see that the bull run was still alive after it had fallen back to $1 and slowly started creeping up around the same trend line. After I longed it at $1.58 all I did was watch it continue up the line. As it approached the $1.99 resistance from the other week(first red line) without breaking it strong intraday I saw the potential for a double top and pull-back. Not worth the risk of loosing the profits because of that possibility so far into this run it has had. I actually sold it yesterday at 1.92 before that last red day on the chart which is today's action. This exit looks about perfect right now because yesterday IFON only hit a high of 1.96. And right now it is looking like that was the end.

It very well could get a push over $2 but there is just something about those round numbers. Notice it never traded at $2. And I noticed that the buying has been coming every day and that had to end eventually. Drew that with a black circle. I was also thinking about the valuation. No longer in net-net territory here and not the kind of net-net I know well enough to run past that valuation. A buy right around $1 off that pull-back would have been sweet in retrospect because the technicals were there for it to be had but I'm happy with this trade. I had a loss today chasing a momo penny stock so this is offsetting the loss.



full disclosure: no position