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NAT Growth & Income Trade Idea & Long Entry

NAT (Nordic American Tankers Ltd) recently pulled back to support following a rejection off the yellow downtrend line. With a dividend yield of over 15%, NAT will be added as an Active Growth & Income Trade idea with the yellow downtrend line as the current price target & additional targets likely to be added, depending on how both NAT & the broad markets trade going forward. Suggest stop of a daily close below 9.90. Weekly chart:

NAT weekly Feb 12th

NAT weekly Feb 12th

Zooming down to the daily chart, NAT recently reversed off support while at oversold levels which have historically preceded tradeable rallies in this shipping stock.

NAT daily Feb 12th

NAT daily Feb 12th

Please keep in mind that stocks with above average dividend yields, which at over 15%, certainly puts NAT in that category, often run the risk of a dividend cut or elimination. NAT appears to be a case of "the baby thrown out with the bathwater" as the shipping stocks have been in a vicious bear market in recent years. I believe a solid fundamental case for NAT can be made in this recent letter from Herbjørn Hansson, Chairman & CEO of Nordic American Tankers Limited (click to view letter).

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4 Comments

  1. RickySixx6 February 12, 2016 9:52 am at 9:52 am

    While the Dividend is great and all, are you playing this as a trade with an achievable short term target or are you playing this like POT where you have a stop around 10 but looking at upside closer to 14-15?

    I only ask because this appears to be a stock susceptible to following equities if a larger market correction happens.

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  2. rsotc February 12, 2016 10:07 am at 10:07 am

    @rickysixx6 Exactly. That’s why I stated “…the yellow downtrend line as the current price target & additional targets likely to be added, depending on how both NAT & the broad markets trade going forward”. The old adage on Wall Street is that “All ships are lifted in a rising tide” (no pun intended with the reference to NAT) and I like to often reiterate that the converse to that also holds true as “All ships drift lower in a falling tide”. As such, should something change in the charts that convinces me that not only NAT but also the broad market look to have more upside, if & when NAT begins to approach that downtrend line, then I will likely extend my price targets.

    BTW- I edited the post shortly afterwards to add the suggested stop of a daily close below 9.90 (just below the S2 level on the daily chart). That should provide nearly a 3:1 R/R on the trade assuming NAT hits the downtrend line within a few months as I’d expect.

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  3. rsotc February 12, 2016 10:18 am at 10:18 am

    One last comment on NAT as well as POT or any of the other recent long trade ideas posted on the site. I’ve made it very clear for sometime now before & after we received confirmation that I expected a new bear market to be underway in 2016. Part of what I try to achieve with Right Side Of The Chart as well as my own trading is to incorporate the most attractive trade ideas, long and short, irrespective of my current market bias. Sure, I’ll usually have a net short (i.e.- more shorts than longs) portfolio when clearly bearish or net long positioning when bullish but I’ve traded long enough to know that my analysis will be dead-on at times and completely off at times as well.
    As such, I try to avoid putting all my eggs in one basket in my accounts, especially my longer-term accounts (IRA’s, etc..) by diversifying my holdings among various sectors, assets classes and well as both long and short positions. While my trading account might pass on a trade like NAT, I did take a small position for a couple of long-term accounts. Also keep in mind that I don’t take every trade idea that is posted on the site, officially or unofficially (see the FAQ section for the various reasons). However, I would never post a trade that I didn’t believe had a decent chance of playing out or at least had a very attractive R/R, even if was a lower probability, counter-trend trade. I also post the best looking setups that I come across as I realize that others may be bullish (and correct), only interested in long trade ideas, while I’m bearish & vice versa.

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