Welcome aboard Tom.
After hours trading is to be ignored when looking at the chart. We don't know that the after hours activity will still be bullish when it comes time for the open on Monday.
I saw some stocks way up in premarket last week and by the time the market opened, price was significantly lower and actually headed lower. I made note of a couple of these situations over in the Boom Boom Room. It was RIG or NGAS I think that was up $1.81 in premarket, but opened up only about 20 cents. A significant difference in what the chart would have looked like if $1.81 was the opening price.
So, after hours is to be ignored until it becomes reality.
Now I may be wrong, but I think CHK will meet resistance at the top of that gap and pull back. I think we will see a snap back down pattern appear.
The 20 day moving average has leveled off and is sitting at the top of that gap. I think price will fail a test of that resistance level and pull back.
One of the reasons I think price will pull back is because of the trend indicator, MACD. It is bearish and growing weaker while price is trying to rally.
When you combine gap resistance, moving average resistance and a trend indicator growing weaker, it favors a failed test of the 20 day moving average.
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If looking longer term than a week, there's no question the weekly chart is bearish. You have a wide range bearish bar on above average volume. (A bearish engulfing pattern!) This pattern would indicate additional weakness this week.
stockcharts.com[h,a]waclyiay[dd][pb50!b20!f][vc60][iut!Lah12,26,9!Lc20]&pref=G
Now again, I could be wrong. So I come up with a strategy, in advance, to take advantage on my being wrong. I would want to wait until I see a successful test of the 20 day moving average before entering. I would have a stop in place when the time came.
An example on managing risk. To manage risk, I would buy a 1/2 position above the 20 dma and a full position if and when price broke out to a new high.
dabum |
