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OHAI Swing Trade + Growth & Income Setup

OHAI (OHA Investment Corp) will trigger a long entry on a break above 2.80 (downtrend line + minor price resistance) with a max. suggest stop below 2.64. Price targets are T1 at 3.10 & T2 at 3.33. Due to the low-price, somewhat precarious fundamental position of OHIA as well as the expected volatility going forward, the Suggested Beta-Adjustment for this trade setup is 0.6.

OAHI daily Sept 2nd

OAHI daily Sept 2nd

Although I have my concerns about OHA Investment Corp's ability to maintain the current quarterly dividend of $0.06, as they have reduced the dividend twice since early 2015 (largely due to an over-weighted long exposure to the energy sector, which they have recently been reducing), should the company be able to maintain or even increase the dividend going forward, based on the current yield of 8.8% plus the potential for nearly 19% in capital appreciation, assuming that my final target of 3.33 is hit, OHIA will be added as a Growth & Income Trade Setup in addition to a the typical Long Trade (swing trade) Setup with the same price targets.

From the daily chart above, it appears that OHIA bottomed back in late June on a text-book selling climax, which is typically characterized by a very impulsive move down following a prolonged downtrend, marked by an unusually large surge in volume. That selling climax formed the Head of an Inverse Head & Shoulders bottoming pattern with the trough of the Right Shoulder put in place back in early August. OHAI went on to break above the Neckline of the IHS pattern on Aug 18th & the fact that the breakout was confirmed on above average volume with a very powerful, impulsive move higher that day helped to validate the IHS pattern & the fact that the down-sloping neckline was a significant technical level.

Since then, the stock continued a bit higher & has been consolidating the recent gains while trading sideways, which helps to alleviate the overbought conditions, allowing for a more sustained rally if & when the stock can break out above the top of this recent consolidation range at 2.80.

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4 Comments

  1. Nick G. September 3, 2016 9:25 am at 9:25 am

    Any concerns about OHAI low volume?

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    • Nick G. September 4, 2016 7:22 am at 7:22 am

      oops, I guess the 0.6 SBA answers my own question……

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      • rsotc September 6, 2016 9:10 am at 9:10 am

        koyla43, Yes, the SBA (a new feature that I plan to start incorporating on certain trade ideas going forward) is largely due to the fact that OHAI is a thinly traded (low volume), low-priced (sub $3) stock that carries above average potential for profits as well as losses, if the trade doesn’t pan out.

        As with all thinly traded stocks or really any trade for that matter, one should always pay attention to the spread (the difference between the bid & ask price) before submitting an order. If the spread is relatively tight, say only a penny or two, then a market order would probably be fine but a quick glance at the level II quotes can help determine if there are enough shares being offered at or very close to the price that you want to buy at. With that being said, I prefer limit orders over market orders on thinly traded stocks.

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  2. rsotc September 16, 2016 12:04 pm at 12:04 pm

    OHAI has triggered an entry with a break above 2.80 although I am not seeing confirmation via above average volume so far & personally, I’m holding off from taking a position as of now. As the entry price was triggered, OHAI is now an Active Trade with the same suggested stop & profit targets mentioned in the post above.

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