• ANR - Oct 16 201420141016
  • CORN - Sep 11 201420140911
  • LL - Oct 22 201420141022
  • SOYB - Sep 12 201420140912
  • WLT - Oct 16 201420141016


Long Setups

Long Setups are stocks or ETFs that are in a bullish technical pattern formation that are poised to break-out and provide an objective long entry. This category may also include stocks that have already triggered a entry but still offer an objective entry or add-on, such as a during a pullback to support.

Oct 222014
 

LL (Lumber Liquidators) was a recent Short Trade idea that hit the second target for a 38% gain back in July. I had discussed the likelihood of extending the final target to T3, which was listed as the potential final target on the previously posted charts. However, LL hit the second target before I had a chance to make that official and so I had to go ahead and consider the trade completed when T2 was hit (as it was too late to make T3 the final target). Fast-forward to today & LL has finally reached that T3 level, which is the level where the R/R no longer warrants remaining short (for those that held) as the odds for a reversal are quite elevated at this time. Final targets are set at the level where the R/R no longer warrants holding the position & more often than not, a substantial & often lasting reversal in the stock is expected.

As the updated daily chart (second chart) below shows, LL is trading at the bottom of what appears to be a bullish falling wedge pattern complete with positive divergence forming on both the MACD & RSI, all while trading just above that key horizontal support level (the previous third target). With the current near-term & intermediate-term trends still bearish for now, I’m still considering long trades as counter-trend trades until/unless the charts say otherwise. I also have some concerns about LL as there is a thin-zone just below the T3 support level which runs down to about the 34.25-34.10 level. If LL were to make a solid break below T3 (about the 48.90 level), there’s a good chance that the stock will back-fill that thin zone. Counter-trade or not, I’m looking for some new long trade ideas for both hedging exposure (for those positioned net short) as well as for those traders position net long, with a longer-term bullish outlook.

With that being said, LL offers an objective long entry here around current levels (51.40ish). This holds especially true for those with a longer-term bullish outlook who believe that this most recent sell0ff is over and the markets are headed much higher. My first target would be the former T2 level, with the actually target set just below the bottom of the July 9th gap at 69.65 (target = 69.55) with a suggest stop on a daily close or solid move below 48.60.

click here to view the live, annotated daily chart of LL

Oct 162014
 
WLT 60 min Oct 16th

WLT 60 min Oct 16th

The WLT (Walter Energy Inc) aggressive Long Trade Setup that was posted yesterday went on to break out above the 60 minute bullish falling wedge pattern (triggering an entry) and just hit the first target, T1 at 1.99, for a very quick 10% profit. T2 at 2.59 is my preferred target at this time but as always, consider booking partial or full profits and/or raising your stops, depending on your own unique trading plan. Updated 60 minute chart of WLT (another coal stock):

Oct 162014
 
ANR 60 min Oct 16th

ANR 60 min Oct 16th

The ANR aggressive long trade setup that was posted yesterday triggered an entry on a break above 2.04 today. Official targets have been added just below the same resistance levels shown on yesterday’s 60 minute chart. T1 is the sole target at this time but additional targets may be added. The suggested stop if targeting T1 would be just below the 2.04 former resistance, now support level. Updated 60 minute chart below. I also wanted to reiterate that ANR, like many of the recently mentioned US coal stocks, has the potential to morph into a much longer-term, bottom play, should we get sufficient evidence of a bottom in these stocks. Therefore, an aggressive longer-term trader or investor could certainly start scaling in here with a stop below the recent lows or depending on their average cost basis as they continue to scale in (my preference would be to only continue scaling in if the recent lows are not violated).

Oct 152014
 

Wash. Rinse. Repeat. WLT (Walter Energy Inc) will once again be added as an aggressive Long Trade Setup on a break above this 60 minute bullish falling wedge pattern. T2 (2.59) is the current preferred target at this time with a final target (T3) at 4.17. Stops will be determined upon entry.  As with the previous WLT long trade, Walter Energy, along with several other US Coal stocks, has the potential to morph into a long-term term trade or bottoming play. However, we just don’t have enough technical evidence at this time to make that case with a high degree of confidence although I have been observing some recent bullish price action in other coal stocks, such as ANR (also shown on the 60 minute time frame below, as this stock has recently broken above this descending price channel & will also offer an objective long entry once the 2.04 resistance level is clearly taken out). Target levels are marked but the suggested sell prices will follow.

 

On a related note, I wanted to clarify or really expand on my previous comments about hedging against short positions. For weeks now I have made a case for a reversal in the $USD and a bullish case for select commodities including gold/gold mining stocks, wheat, corn, soybeans and select US coal companies. I continue to believe that these are some of the most promising trade ideas heading into the 4th quarter & likely well into 2015 and as such, although they are not considered typical hedges against short positions in US equities, they very well could prove to be if things play out that way (dollar down, commodities up). That has certainly been the case recently with precious metals and those commodities (and commodity producers) exhibiting very strong relative strength against equities. In this sense, I am running a quasi-hedged portfolio or at least a long/short portfolio, since it is not directly hedged via equity index futures, call options or bullish ETFs against my short positions.

Sep 122014
 

DBA HoldingsSOYB (Soybeans ETF) will be added directly as an Active Long Trade at current levels (last trade was 20.46). I will make a case for the SOYB long trade below but keep in mind that SOYB is a thinly traded ETF and is one of several active long trade ideas in the soft commodities/agricultural industry. I also plan to likely add DBA (agriculture ETF) which holds the following stakes in various ag related commodities, including a target of 12.5% in soybeans futures.  Click on this DBA holdings chart to view the complete current weightings in DBA. With plenty of liquidity and the added benefit of diversification amongst various agriculture commodities (which can also act as a drag on performance, should some of the components lag), DBA is certainly a viable option for traders or investor seeking exposure to the ag sector at this time. I’m not bullish on all of the components of DBA, hence my reasoning for posting, as well as personally going long only select agricultural commodities at this time. However, with that being said I do think the chart on DBA is setting up bullish and will cover DBA in a separate post soon.

Although one could certainly trade soybean futures in lieu of SOYB, the trade ideas on RSOTC are limited to individual stocks and exchange traded products (ETFs, ETNs, CEFs, etc…) as those are the most popular and accessible trading vehicles for the majority of traders and investors.  Each individual may opt to trade futures contracts, options, or leveraged ETFs as a play on any of the trade ideas shared here. Even with the low volume on SOYB, the spreads do not seem excessive and unlike closed-end funds (CEFs), which often trade at substantial discounts or premiums to the underlying holdings, SOYB trades at NAV. With that being said, I typically prefer to use limit order vs. market orders on thin volume stocks & ETFs.

As with the recent WEAT & CORN trades, SOYB is clearly an attempt to catch a falling knife as prices have been in a powerful downtrend since peaking earlier this year. Therefore, this trade should be considered fairly aggressive until/unless we get some decent evidence of a trend reversal. Looking at the weekly chart of $SOYB (the spot price of soybeans), it appears that soybeans have fallen to the bottom of a decent support zone following a rarely seen overbought reading on the RSI 14. As this chart illustrates, very sharp rallies have immediately followed shortly after the RSI reached oversold levels. In fact, the exact bottoms did not come on the initial oversold reading but very shortly afterwards following a higher low on the RSI, such as we now have.

$SOYB weekly Sept 11th closing price

 

Zooming down to the daily time frame, $SOYB printed a hammer candlestick yesterday which is a potential reversal stick (pending upside follow-thru over the next few sessions). $SOYB also has very strong bullish divergences in place as it just tagged what appears to be the bottom of a descending price channel. My targets for SOYB will be roughly based off of this daily spot price chart as well as soybean futures. T1 (the 1168ish area) is my first & preferred target at Continue reading »

Sep 112014
 

As a follow-up to the previous post with the $CORN (Spot Corn Prices) weekly chart, below is the 5-minute chart of US Corn Futures as well as the weekly chart of CORN (Corn ETF), highlighting the current volume surge which is indicative of a selling climax.

click here to view the live, streaming chart of US Corn Futures. Once the page to Investing.com opens, from the top of the chart select: Instruments/More Instruments & then “U.S. Corn Futures” under the Commodities section.

Sep 112014
 

$CORN weekly Sept 11th

In the most recent update on the CORN (Corn ETF) Long-term Trade idea posted last week, it was stated that CORN had broken the 25.60 support level (below the recent consolidation range) which would likely open the door for a move down to the 340 major support level on $CORN (spot corn prices). Since the original post on the CORN trade idea back on July 28th, I had highlighted two likely scenarios for $CORN: either a bounce from around where $CORN was trading at the time OR a continued move down to the 340 level in which not only bring corn prices down to a key long-term support level and that we would also likely have strong bullish divergences in place on the weekly PPO when/if prices got there.

Although the chart of $CORN (spot prices) is an end-0f-day (EOD) chart, not updated until after the market close each day, I’ve been watching US Corn futures today and so far they kissed a low of 335.87 just a few minutes before I started working on this post and have since reversed sharply so far. Of course the day is still young but regardless of any short-term gyrations, we now have corn prices at key long-term support while extremely oversold (the weekly RSI 14  on $CORN was at an extreme level of 23.73 at yesterday’s close). We have the strong bullish divergences forming on the PPO as well as volume patterns on CORN (corn etf) that are indicative of a selling climax (ditto for WEAT, which I will cover under a separate update).

After stopping out the recent Active Long (swing trade) on CORN last week, I am going to add CORN back on as a new Long Trade idea. I also believe this is an objective area for a new entry or add-on to an existing position for the CORN Long-term Trade idea (investment) that was initiated in the July 28th post.

click here to view the live, annotated weekly chart of CORN

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