Hi MJ,
Yes, here is the current daily chart:
139.142.147.218
And here are the previous posts:
I noticed on the previous posts that I suggested waiting at least until RNWK successfully broke through intraday resistance (i.e., the 200 min ema on the 1 min chart, which is equivalent to the 40 ema on the 5 min chart or the 20 ema on the 10 min chart).
I should have kept my eye on this one, it actually signaled last Thursday, when it rallied above intraday moving average resistance and confirmed that break a short time later:
139.142.147.22
Note that the stochastic crossover signal occurred just before noon on that day, and this preceeded the rally through resistance by over an hour. The entry would have been about $5.70, and that would put you up 6% on the trade thus far.
But you can see from the chart that RNWK is now showing weakness, with early sell signals that have not been confirmed yet with a failure at the moving average support. I expect that will happen early in tomorrow's session, and RNWK should then correct back below $6 to the middle of the BBs.
But note also that the BBs are still very contracted, and I suspect we will see a powerful move in RNWK to expand the BBs soon. However, it is not at all a foregone conclusion that this break will be to the upside, because RNWK was turned back from resistance from the 50 sma today (not yet confirmed by intraday failure!), and has been testing the 200 sma:
stockcharts.com[w,a]daclyyay[dc][pb50!b200][vc60]&pref=G
Now, the 200 sma does not have the usual significance here IMHO, because RNWK has been in a sideways trading range for over two years, not an uptrend.
stockcharts.com[w,a]waclyyay[df][pb40!b10][vc60]&pref=G
The most likely direction for a breakout is to the upside, particularly when you consider the heavy volume candles to the upside from last November and again in early February, when there was a big gap to the upside (see daily chart above). Also, that last upside gap has been filled, which means that the bottom of the gap represents pretty good chart support.
Note also on the 3 year weekly chart the repetitive breakout to the upside, which has been turned back at $7.00 again and again over the last 2 years. That makes a long position the best strategy IMHO, but not at this time... rather, I would wait until the stock again becomes oversold, preferably at the lower BB rail.
Sooner or later RNWK will again test $7.00, and hopefully you will be long at the time. As it rallies towards $7.00, if I were trading it (I likely will), I would take profits with half the position, tighten up the stop to about 2% or 3% stop loss on the other half of the position, and prepare for a short setup which should occur next. To guard against the possibility that RNWK will finally break above the $7.00 barrier, I would not actually enter a short until it gave clear signs of failure. Then, I would set a stop just above $7.00 in the event that the stock suddenly bursts through resistance.
With a little luck and careful management, this might allow us to exploit the possibility of considerable upside should a breakout occur, while still being ready to short the shinola out of RNWK as we get stopped out of the long position and RNWK falls back to the sub-$6.00 range again if that's the way RNWK wants to play.
Thanks for pointing this out, I didn't look carefully enough at it the last time. RNWK is an excellent cycling stock that can be traded long and short. But the caveat here that should always be kept in mind is that trading ranges don't last forever... sooner or later there will be a break out of the range, and with RNWK the bias is a break to the upside. That means that long positions should probably be more heavily weighted than short positions, particularly if the general market is in rally mode.
T |
