NIHD hit the first target today (5.15) for a quick 12% gain and as posted earlier, a pullback soon is likely so consider taking some profits if you have not done so yet. If prices happen to move above T1 tomorrow, there is a thin zone between that level and T2 so we could see a quick run up to the T2 level before any meaningful pullback. Regardless of whether or not the stock does pullback soon, I think this trade has the potential to be a much longer swing trade/investment assuming that the broad market holds up. Updated 60 minute chart (in which the current trade is based off of) as well as the updated and slightly revised weekly chart below, which shows the longer-term bullish potential for this trade.
I was asked the question: What are T1, etc… levels and how are they calculated? Although I’ve discussed this in the past, as new users come into the site on a daily basis, I figure that I would share my reply for those interested on what T1, T2, etc.. means and how best to utilize the often multiple price targets listed on the trade ideas on Right Side of the Chart. My reply below:
T= target. So T1= first target, T2= second target, etc… These target levels are calculated pretty much based on my read of the charts. I take into account many factors including the magnitude and technical projection of the pattern that the stock is expected to break out of but largely these targets are just levels that I “see” or feel that the stock is likely to hit. Those levels are usually what I view to be significant support or resistance levels and a large part of where I place these price targets is based on intuition and experience. Also note that in recent months, I started listing the target levels just below the actual resistance level on longs (above on shorts) in order to help assure a fill when exiting a trade. It has been my experience that if too many eyes are watching the same level, expecting a stock to reach that level before pulling back, then the Big Boys (institutions, market makers, computerized trading programs, etc..) will often step in early, causing the stock to fall just shy of the expected target.
For those in the NIHD long trade, please note that I have added a new target before the former first target. Upon further review of the charts I have revised T1 to the 5.15 level. The previous targets remain as posted and have been resequenced accordingly (T2-T4). As this trade is currently up nearly 11% so far, my preference will be to book partial or possibly even full profits at this revised first target.
I was just asked about the LEN short and in glancing the previous notes/charts, it doesn’t appear that I made any stop suggestions. If you’ve already stopped out, which you should have if only targeting one of the lower targets, then great. You can always re-enter for a swing short trade if & when we get some solid technical evidence of a reversal. If not, keep in mind that LEN is right about at my usually 3:1 R/R stop threshold in relation to my final and preferred swing target zone (22.30-21.62).
LEN was shorted in two one-half position lots, at 40.01 and 36.42, giving the trade an average cost of 38.22. Therefore, the position is currently down about 5.48 or 14.3%, a very substantial loss but again, still right around the 3:1 R/R based on the profit potential to the final target range. As far as the weekly charts look, LEN is still very close (slightly above) that key weekly resistance level and currently, prices are backtesting the weekly uptrend line that dates back to Aug 2011. Any additional upside above that resistance level starts to quickly damper the bearish case.
As far as the daily charts, LEN is making a run for a second, higher level backtest of the recently broken rising wedge pattern while also making a new multi-year high today… a mixed bag of bearish and bullish chart action IMO. The new high and current momentum are bullish but on the other hand the MACD and RSI continue to lag significantly on this move to new highs, a clearly bearish development. Putting all that aside, I think it would be best to wait until tomorrow to see if LEN continues to build on these gains, especially after kissing the underside of the wedge once more, or if prices turn back down. Therefore, stops at this point should not be much above the 44.40 level (which is about where a backtest would come in tomorrow). Updated daily & weekly charts:
Irrespective of the recent false breakdown and snap-back into the wedge pattern, LL remains one of the better looking longer-term swing short trades. Following the breakdown below the primary uptrend line in LL, Lumber Futures (to which LL stock is highly correlated) made what appears to likely be one final thrust to new highs, in which a nice shooting star topping candlestick was put in and confirmed via prices dropping sharply since. As of today, we also have lumber futures trading down sharply and having broken below what looks like a well defined bearish rising wedge pattern. Only time will tell if this trade plays out and although it is now down about 3 points or 4% from the original entry (64.87), it is still less than half way to the 10%+/- stop out criteria based on my preferred target of 35.10. Updated daily chart of LL as well as an updated daily chart of Lumber futures:
THM did manage to print a 60 minute close above the 1.50 resistance level, therefore, providing an entry at the first tick of the next candlestick (1.54). As this is such a low-priced (and again, higher risk) stock, every penny & a half accounts for a 1% gain or loss. Therefore, I would consider using slightly higher stops than previously suggested, using no less than a 3:1 R/R to your preferred target. Also keep in mind that although only two profit targets are shown at this time, I may very well add an additional profit target just below that uppermost horizontal resistance line which comes in around the 2.00 level.
However, first things first and that would be to contain losses if this potentially high risk/high return trade does not pan out. Although I’ve personally taken all of the gold & silver stocks posted here recently (excluding the GDX ETF and may or may not take THM, just watching for now & would like to see a little volume start to come in), I still have my concerns about the recent breakouts reversing soon and as such, I continue to take full or partial profits on these trades at the early targets in addition to keeping my initial position size on the lighter side.
THM is a low priced (translation: higher risk/higher return potential) mining stock that looks to be pushing against horizontal resistance here at 1.50. To help minimize the risk of a false breakout, consider a long entry on a 60 minute close above that level. Consider a stop under 1.47 if targeting T1 and a stop below 1.44 if targeting T2, which is the current final target at this time. 60 minute chart shown.