Re: END ... When I look at a chart, I not only try to determine the short and long term trends, but more importantly, where the odds are high that either demand (buying) will drive price, or whether supply (selling) will drive price.
If we think about the psychology behind buying and selling, it's only human for people who are losing money and feeling the pain of those losses to sell once they can get back to even, especially if they have held for a long time. I've known people who have hidden their statements from their wives because they didn't want their wives to know how badly they screwed up. It is a great sense of relief when they are finally able to get out whole. This psychology of holding a losing stock also contributes to the average down theory. "Some" people are trying to ease that pain and by averaging down, they don't have to wait as long to get whole, so the thought process goes.
These are the people I refer to as the praying people. They are praying for the opportunity to get their money back and never buy that losing piece of stock again.
Now here's what a long term chart will show. Every single share owner who bought in 2004, 2005, 2006 and thru April of 2007, and is still holding, is holding a losing position. A lot of these people are praying for that pain relief. A lot of these people are waiting to sell. When this selling begins, this brings increased supply to market. Upward price movement is expected to slow down unless the fundamentals (which I don't follow) are strong enough to bring enough demand to offset that overhead supply.
In looking at the chart below, let's just focus on that immediate overhead supply. Starting in October 2006, where you see that little flag that says 2.01, and moving to the right up until May 2007 is your immediate overhead supply. Note how price moved laterally between 2.00 and 2.40 during that time. Price is now running into that supply. Since there is a lot of supply in this price range, I expect price acceleration to slow down. Since this isn't a stock that institutions will buy, it will take a lot more demand from the retail trader to offset that supply.
Does this mean price won't continue higher? No.
It means that the odds increase that we will see a price consolidation or even a price reversal like we are seeing with WNR before price can continue higher.
So, this is where managing our positions determines our overall results. I have continuously stated that my strategy is to sell "part" of my position into that overhead resistance to insure that profits gained by that point don't erode. I will buy that position back later if my remaining position isn't stopped out. I will buy another full position at price support or at the breakout point, whichever occurs first.
END is now entering the bottom of that immediate overhead supply. It is reasonable to expect price to consolidate or pull back here.
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