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CIE Trade Setup

Although CIE (Cobalt Int'l Energy Inc) may need another thrust down within the wedge first, a long entry will be triggered on a break above 1.80 with the entry possibly revised to a break above the wedge/downtrend line, should prices move lower in the coming weeks+. The maximum suggested stop (based on an entry over 1.80 and targeting T3) is any move below 1.60 with those only targeting T1 or T2 might consider a tighter stop using an R/R of 3:1 or better. As a low-priced energy stock, the elevated risk of bankruptcy makes this a very aggressive trade setup.

CIE daily July 14th

CIE daily July 14th

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Jul 14, 2016 11:41am|Categories: Unofficial Trade Ideas|Tags: |14 Comments

14 Comments

  1. pangblood July 14, 2016 12:06 pm at 12:06 pm

    Nice, Thanks Randy. This is the sort of trade that I and perhaps many others were waiting for, thanks for the heads up

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  2. pangblood July 14, 2016 12:30 pm at 12:30 pm

    @rsotc CJES also has multi month divergences going back a year. The company just announced it’s 1.4 billion debt to equity swap yesterday, perhaps add this to your radar

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    • rsotc July 14, 2016 1:10 pm at 1:10 pm

      Thanks pangblood. I’ll check out CJES & let you know if anything stands out to me. Just remember to adjust your position size for the above average gain & loss potential on any low-priced stocks, especially those in the energy sector where the risk of bankruptcy in many of those smaller companies remains elevated.

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      • rsotc July 14, 2016 5:01 pm at 5:01 pm

        @pangblood I took a look at CJES. Personally, I wouldn’t buy the stock with your money 😉 . But seriously, a 0.37 stock in the energy sector even with that debt to equity swap sounds extremely high risk as is any penny stock. That in no means says it can’t or won’t go up & even rally 100% or more but I also don’t see an objective entry in the charts. With that being said, if you are long or considering going long, I will say that 0.80 & 1.00 look like pretty solid resistance levels/targets (with your sell limit orders set slightly below to help prevent missing a fill, should the profit taking being a bit early). Good luck if you take it & thanks for bringing it up as I’m always on the lookout for the next potential trading opp.

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  3. Gaucho August 4, 2016 3:03 pm at 3:03 pm

    Hi Randy @rsotc,
    After the earning report has gone min 0,7682 (“sell limit orders slightly below” mentioned).
    Is it still valid trade when 1.80 is reached or today is a good entry point?
    Regards

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    • rsotc August 4, 2016 3:27 pm at 3:27 pm

      @Gaucho – CIE had fallen off my radar since it had drifted so far below that 1.80 potential buy trigger. However, now that you mention it, CIE doesn’t look too bad for an AGGRESSIVE entry here.

      The stock fell sharply right after the open following the earnings report but nearly immediately snapped right back up to the bottom of that falling wedge pattern. The stock also managed to regain the important 1.00 level, which companies will usually try to vigorously defend.

      The fact that I’m more bullish than bearish on oil, especially longer-term plus looking at the chart of CIE, with the bullish falling wedge AND positive divergence still in place, I think a long here, although a very aggressive & certainly counter-trend/catch-a-falling knife trade, offers an excellent R/R as you can go long here at 1.04 with a stop about 10 cents below, targeting any or all of those price targets that I listed on the setup above.

      I would suggest to take only a relatively small position as this stock is in a very precious technical position & although I haven’t looked into it, I think it is safe to assume that the company is also in a very precarious fundamental position as well. Also keep in mind that the risk of trading low priced stocks, especially those in an industry plagued with pricing & supply issues such as the energy sector, that the risk of an opening gap or intraday trading halt with the stock opening down 50%+ on rumors or news of a bankruptcy filing is a very real possibility. Stop-loss orders do nothing to mitigate this risk as they are by-passed (skipped over) when a stock gaps below your stop price. Therefore, short of buying puts (which are likely almost cost-prohibitive on this stock), there is no way to effectively quantify your loss on this trade, should a sudden & unexpected bankruptcy or share dilution plan be announced.

      The 1.80 entry trigger was set when that level was just above the top of the falling wedge. At this point, the next buy signal would be a breakout above the wedge with 1.80 the first key resistance level with the first price target set slightly below. However, CIE is too far away from the top of that wedge now so I’m going to remove this from the trade setups category for now but might revisit it later as a new trading opp. Feel free to inquire about updates if you take a position or just want to follow it for now.

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  4. Gaucho August 8, 2016 9:29 am at 9:29 am

    Hi Randy, @rsotc
    Thank for you update and futures updates.
    I’ve position (as you suggested a small one)
    Regards

    .

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    • rsotc August 8, 2016 12:39 pm at 12:39 pm

      G-luck on the trade @Gaucho. I’m still holding my starter position.. haven’t added yet but might. I’ll continue to monitor CF as so far, so good with the stock recovering a good amount of the post-earnings losses & defending that weekly support while moving back inside of the bullish falling wedge pattern on the daily chart.

      (edit) In clicking a notification to view your comment, I had thought you had posted that under the recent CF trade setup. FWIW- CIE has also snapped back up inside its comparable bullish falling wedge pattern on the daily time frame & is, so far, defending that key 1.00 level. G-luck!

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  5. Gaucho August 9, 2016 1:53 pm at 1:53 pm

    Hi Randy, @rsotc, finally when It has reached 93 I was stopped out.
    Regards

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    • rsotc August 9, 2016 2:33 pm at 2:33 pm

      Gaucho- Sorry to hear that. I just looked at CIE & it seems that the stock printed a bearish engulfing candlestick yesterday shortly after my reply. Most likely a good move on your part to let it go as the stock has followed through to the downside today (thereby confirming that bearish engulfing stick so far) with the stock back below the key 1.00 level.

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  6. Gaucho August 19, 2016 6:54 am at 6:54 am

    Hi Randy @rsotc,

    Yesterday CIE strted to recover and it had a good volumen News: insider buyers.

    Is the trigger still the 1.80 breaking above 1.80?

    Regards

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    • rsotc August 19, 2016 9:39 am at 9:39 am

      Gaucho- Funny, I actually mentioned CIE in the mining stocks video yesterday. A few weeks back, I removed CIE from the Long Trade Setups category because it had failed to trigger an entry and prices had moved so low that the bullish chart pattern appeared to be foiled. However, that proved to be an over-throw of the wedge to the downside with prices going on to move back inside the wedge (which I had not noticed at the time as the stock had fallen off my radar), then gapping up very sharply above the wedge yesterday (I assume on earning or some other news but I haven’t verified that).

      As I mentioned in the video, the stock was trading up something like 30%+ yesterday and too far above the wedge at the time for an objective entry. CIE faded some of those gains & closed right back on the top of the wedge yesterday & so far today has opened right on it again. My gut says to hold off for now as crude is very overbought near-term so I’ll try to keep an eye on CIE & I’d like to read up on the cause of yesterday’s pop to see the reason behind it.

      CIE is a very low priced energy stock so I’d image the risk of bankruptcy is elevated, although maybe “less elevated”, depending on whatever the catalyst that caused yesterday’s pop. Feel free to drip on me again soon if I don’t make any follow-up comments on CIE.

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      • Gaucho August 19, 2016 10:28 am at 10:28 am

        Randy, yesterday news was related to insider bying

        06:47 AM EDT, 08/18/2016 (MT Newswires) — Cobalt International Energy (CIE) CFO David Powell and CEO Timothy Cutt acquired 100,000 shares each, according to SEC filings late Wednesday.
        Shares closed up 13.33% in after-hours trade on Wednesday but are flat so far Thursday in the pre-market session.

        09:45 AM EDT, 08/18/2016 (MT Newswires) — Cobalt International Energy (CIE) was trading 20% higher at Thursday’s open on reports that CFO David Powell and CEO Timothy Cutt acquired 100,000 shares each, according to SEC filings late Wednesday.
        CIE last traded at $1.26, still in the bottom end of its 52-week range of $0.77 to $9.43.
        Price: 1.26, Change: +0.21, Percent Change: +20.00

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        • rsotc August 19, 2016 10:52 am at 10:52 am

          Good to know, Gaucho. Thanks for passing that along. So far today, CIE has been holding right on top of the wedge. Chart still looks good but my gut tells me to just watch CIE for a bit to see if this pop sticks. Insider buying & selling can be deceptive at times, particularly when it is associated with the exercising of stock options.

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