[ Sunrise Technologies: SNRS ]
Let's look at this from a risk-management/downside risk perspective instead of a price forecasting perspective. I won't make an attempt to forecast the near term price development because as you've all seen, it's difficult, and I've had my fair share of humble pie. No seconds please.
I can, however, tell you where I would believe the risk to be significantly reduced enough to warrant opening a long position once more.
Today, SNRS significantly corrected from its peaks (I didn't need to tell you that). When the price just traded in a tight range early this morning, I was thinking that perhaps we would get a Spinning Top candle to signal the near term stabilization of the price. Coming back about an hour later, however, I was mildly surprised to see that the price had already deteriorated during my absence.
The breaking through (to the downside) of the $9.50 uptrend line was the first sign a panic-stricken momentum trader should have taken as an exit signal. This in fact had been the case, as shown in the following chart:
quote.yahoo.com
From then on, SNRS's fate was left to the forces of supply and demand, and supply quickly outstripped demand until at $7.50, where support existed for the price (I used the peak price of 3/31/98 as the expected price level where buyers would materialize).
The closing price, however, appears to be in Limbo. There is no significant support at this level to suggest that $8.50 has a firm basis to make a stand. I expect support would materialize at either of the following:
(1) the 9 dma (at $7.90) where it has only so-so accuracy,
(2) the above mentioned support level at $7.50, or
(3) the 21 dma (at $7.00), where a majority of the significant price stands/turns have revolved around.
Note that the strength and significance of each level increases as the price decreases. Other things to note:
(1) the decline was accompanied by the 2nd highest volume day for SNRS since December of last year. Price is confirmed by volume.
(2) near term momentum has peaked with today's decline, a no-no for momentum theorists. Combining momentum theory with the 21 dma, I used the combination to time my entry at $6.00. It has its merits.
(3) stochastics have crossed over for a bearish signal.
(4) upside movement may be limited due to the immediate overhead resistance from today's losing traders who refuse to take a loss.
I expect the latecomers might want to nab this at these levels at their own risk. Should I make another entry, I would wait for price stabilization to occur at one of the three levels mentioned above. If the price moves in a way such that my sought-after risk/reward target is not met, then too bad for me.
Regards,
Rainier |
