Buffalodog,
Ok, here's a seminar for ya. Pay close attention to avoid becoming Bewilderedog.
I have gotten a few requests to explain just what the heck I see in CHK at this time. Well, here goes:
In the same way that a MIMBO goes through a retest of the breakout above the major downtrend, A MEEP is a retest of the break above a short term downtrend. It often results from a steep downtrend that is clearly ("clearly" being a relative term) too steep to be maintained. That is why the bounce is purely technical in nature. With a MEEP there is no MIM. Using CHK as an example, there are several significant MEEPs that key off the high on 3/5 which happens to be a significant news day for CHK.
The first is from the high on 3/5 across the high on 3/23 which is a day that CHK gapped up on. That line is broken by another news day which was negative, 4/13. The close on 4/13 was on the downtrend line but the high that day can be seen as significant in that it set up the downtrend line that was used as support for the head in the current IHS on 5/7. CHK then dropped the next day but on 4/17 gapped over that line with another news release. From there, CHK used that downtrend line as support until it MEEPed on 5/1. The volume that day is the verification of the MEEP and 5/1 is also the bottom of the left shoulder of the IHS. Since 4/17 was significant in that it was the day when CHK gapped over the downtrend, the high that day sets up a downtrend line that is less steep than the first but still too steep to be maintained. THAT line is the current resistance. The last bit of voodoo here is the line that starts on 4/17 (the day that gapped over the line that set up the left shoulder on a MEEP) and continues down across the high on 5/7, the day the head was put in. THAT line was broken on 5/8, the day before earnings, and used as support on a closing basis on 5/8 and 5/9. THAT line was, on Fri. 5/15, used as support on the low at 4 3/4 which is currently (hard right edgewise) the right shoulder of the IHS.
Now, let's review:
Draw the line from the high on 3/5 across the high on 3/23 for support of the left shoulder that was put in on 5/1.
Draw the line from the high on 3/5 across the high on 4/13 for support of the head that was put in on 5/7.
Draw the line from the high on 4/17 across the high on 5/7 for support of the right shoulder that was put in on 5/15.
Draw the line from 3/5 across the high on 4/17 for current resistance.
That just about sums it all up. The technical target is halfway from the low on 5/7 to the high on 3/5. That calls for a minimum move to 6 1/16. The target date is 5/22.
The process described above is chart analysis only. In the case of CHK, the TA supports the CA.
DougR |
