OK, I’m back from my appt. and I just wanted to confirm that the breakout/long-side entry in PEIX is official. The downtrend line came in around 5.00 today and the stock clearly took out that level shortly after my previous heads-up post. My target levels remains the same but have been adjusted for the recent 15 for 1 reverse stock split (these levels are simply the previous targets multiplied by 15).
Just as an FYI for those new to the site: My price targets are typically horizontal resistance (for longs) or support levels (for shorts) where I believe the odds for a significant reaction (pullback or bounce) will occur. However, I will typically list the prices targets just below (for longs) or above (shorts) those levels as to help minimize the risk of barely missing a fill on a closing trade if too many eyes are watching the same level and a large cluster of orders causes they stock to reverse just shy of the support or resistance level. In other words, it’s not worth risking missing a nice exit on a trade by trying to milk out the last few pennies.
For those interested in this trade, please refer to the previous notes which can be accessed by clicking on the blue symbol “PEIX” at the bottom of this post. PEIX should be considered a very aggressive trade (high potential return but high risk, including that of sudden & sharp reversals or unexpected large gaps). Therefore, make sure to adjust your position size accordingly to account for the increased expected volatility or pass on this one if it does not fit your specific trading style or investment objectives. In fact, as I mentioned when I posted the original setup, there is a lot of controversy regarding the government mandate for E10 (10% mixture of ethanol added to gasoline). Just yesterday, I received this petition by email. Any increase or decrease to the current proposed mandates on ethanol mixture ratios is likely to have a tremendous & potentially rapid impact on the stock price of PEIX. I wouldn’t post the chart if it didn’t think that the potential gains outweigh the potential risks on this trade but I just wanted to be very clear on the potential risks associated with this trade.