STOCKS TO WATCH - MONDAY, NOVEMBER 8
ARBA is setting up for a snap back up buy pattern. On 10/28 the price jumped on an earnings announcement and proceeded higher for the next couple of days. As the price climbed above the upper regression channels, we saw some profit taking come in. Profit taking was on light volume which is a bullish sign.
The price is now sitting at the middle of the regression channel which also happens to be the 38% Fibbonaci retracement from the $10 October low, just before the price broke out, to the high several days ago. This is where the odds are suggesting the price reverses to the upside.
There are several indicators supporting higher prices on Monday. In the middle window of the accompanying chart, you'll notice a series of short term relative strength and stochastic indicators. All of them have turned "flat" or are starting to rise. This change in the short term trend appears at a time when the price was still falling. This divergence is suggesting the price rises on Monday.
The lower window will show very strong fuel cells via the MACD indicator. These fuel cells should have the energy to propel the price to a new 20 day high.
If the price gaps up at the open, I would be a buyer right away, as long as the price doesn't gap too far to the upside. Anything lower than a 50 cents gap would provide me with the confidence to go long. A gap above 50 cents will take a different strategy which I will cover in another post. If we don't have a gap up in price, I would wait for the price to trade above Friday's opening price.
Once the trade is triggered, the price should not come down and set a lower low from Friday's action. If it does, the pattern breaks down and that's where my stop will be. I see about a buck and half to $2 in profit once the trigger point is achieved.
ttrader.com
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KVHI, oddly enough, has the same set up as ARBA with regards to the price sitting at the middle of the regression channel. The short term relative strength and stochastics, in the middle window, are suggesting KVHI will turn in the next day or two.
The fuel cells in the lower window are still positive although weakening just a little.
The set up is a 4 day consolidation range with price pulling back to the middle of the regression channel.
With the weakening fuel cells and the consolidation phase, my entry will be a little different. It's a buy if it gaps up at the open but if it doesn't, I think one should wait until the price trades above Friday's opening price.
If the trade triggers, I don't think the price will set a lower low from Friday so, that's where my stop will be. My price target is $11.50.
Due to the consolidation, it's important to wait for the price to trade above Friday's open if we don't see a nice gap up at the open.
ttrader.com
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