15 April 2007
Joshing on Breakaway Gap Verse News / Broker Coverage
Joshing wrote:
chr wrote:
Joshing wrote:
Bought some Inter-Roller at 0.985
0049 GMT [Dow Jones] STOCK CALL: Merrill Lynch starts Inter-Roller
Engineering (J74.SG) at Buy with S$1.59 target price as believes stock will be re-rated in coming year on strong order book prospects; forecasts EPS CAGR of 28% over 2007-09 which translates into "attractive" P/E of 12X for FY07, 10X for 2008. "Inter-Roller has succeeded admirably in penetrating the international markets for aviation infrastructure projects;" rising passenger traffic to continue driving growth of airport infrastructure. Stock yesterday closed down 1.1% at S$0.885.(WES)
i'm not sure on how the prediction for interroller was done, as in your timing was pretty much perfect; the stock closed at $1.03, and you bought in at $0.985, way higher than any last done price in any six months, and off the 14d, 1.75std dev bollinger band limit, catching the sudden gap up - generally, i wouldn't dare to touch a stock which shows a sudden gap up in the day itself, as i'm a bit on the conservative side.
Aside from that, any indicators why you particularly chose the entry today, at a particularly high price (vs the previous 6 months?)
Personally, from what can gauge of the indicators, looking at the 12/26d macd, while there was a very obvious "long" call on it since mid march, with the price increasing, the 14d MA cuts the 50d MA decisively on 2 apr.
Also, the accumulation vs the sellout of the CMF and RSI seemed healthy, but overall, i didn't see any positive indicator to point to the sudden gap up (aside from the news report quoted above)
Attempted to chart a wedge/triangle, but generally, i don't find such wedges/triangles too helpful, as it depends on the anchor timeframe.
lastly, I couldn't see any bullish mat hold in the candlesticks for 29/30 march, as the closing was 0.5c below the previous day.
Aside from that, are we expecting a flag/pennant in the days to come, or can we expect it to continue its upsteam for consecuetive days? Long term wise, my indicators say it's still positive to hold/buy, although I haven't confirmed the fundamental ratios yet, as a MOR trader.
This is part of my own technique which I have researched and discovered a relationship between market news and price behaviour. It's not standard teachings from the textbook; rather you won't find this in books.
Let me copyright this first before I go further
You are not allowed to republish the following (below) without permission of my written consent.
How does one tell the difference between a common gap and a breakaway gap? At the initial glance, it is really hard to apply the theory practically.
Common gaps will be covered eventually.
Breakaway gaps don't (This however, contradicts the technical point that all gaps will be covered) or rather I would say, not so soon.
Breakaway gaps occur when the gap up is news related. Look at the charts for
China Hongxing at 17th Apr 2006. What happened here? The company announced a placement to investors. But what's important in this placement is that there is a condition that it will meet profit targets set out in the announcement up till 2009.
China Hongxing at 10th Nov 2006. What happened here? Research report coverage on the stock.
Sino-Environment at 14th Dec 2006. What happened here? Announcement of some acquisition to boost production.
Pacific Andes at 26th March 2007. What happened here?
Announcement of acquisition in China Fishery.
Labroy Marine at 13th March 2006. What happened here?
Announcement of first rig project.
Epure at 22nd Nov 2006. What happened here?
Research coverage issued on the stock.
Chemoil at 29th March 2006. What happened here?
Research coverage by JPM.
Inter-Roller at 3rd April 2007. What happened here?
Research coverage by Morgan Stanley.
There are many other occassions where such events have occured in the past, but what is crucial is the price behaviour. All these stocks gapped up from the open and usually see substantial gains. The reverse is true, i.e. profit warnings, bad news etc.
Their opening prices are also usually the low (for bullish breaks) and highs (for bearish breaks). When breakaway gaps occur, no supports and resistances will hold and sentiment towards that stock is usually manic/panic.
How do we trade this?
We buy/sell (depending on the news if its bearish or bullish) at the open with the condition that
- the stock MUST gap up/down
- the preceding chart formations look ok to support a breakaway gap, market depth etc.
- cut loss at 3 bids below open price
- no upside target. Just ride with it and monitor intra day for signs of weakness
FJ Benjamin gapped up this morning on news that GS covered the stock with a strong buy rating. I'm just basically repeating the same process I did yesterday with Inter-Roller and Pacific Andes not too long ago.
Joshing wrote:
chr wrote:
Joshing wrote:
Bought some Inter-Roller at 0.985
0049 GMT [Dow Jones] STOCK CALL: Merrill Lynch starts Inter-Roller
Engineering (J74.SG) at Buy with S$1.59 target price as believes stock will be re-rated in coming year on strong order book prospects; forecasts EPS CAGR of 28% over 2007-09 which translates into "attractive" P/E of 12X for FY07, 10X for 2008. "Inter-Roller has succeeded admirably in penetrating the international markets for aviation infrastructure projects;" rising passenger traffic to continue driving growth of airport infrastructure. Stock yesterday closed down 1.1% at S$0.885.(WES)
i'm not sure on how the prediction for interroller was done, as in your timing was pretty much perfect; the stock closed at $1.03, and you bought in at $0.985, way higher than any last done price in any six months, and off the 14d, 1.75std dev bollinger band limit, catching the sudden gap up - generally, i wouldn't dare to touch a stock which shows a sudden gap up in the day itself, as i'm a bit on the conservative side.
Aside from that, any indicators why you particularly chose the entry today, at a particularly high price (vs the previous 6 months?)
Personally, from what can gauge of the indicators, looking at the 12/26d macd, while there was a very obvious "long" call on it since mid march, with the price increasing, the 14d MA cuts the 50d MA decisively on 2 apr.
Also, the accumulation vs the sellout of the CMF and RSI seemed healthy, but overall, i didn't see any positive indicator to point to the sudden gap up (aside from the news report quoted above)
Attempted to chart a wedge/triangle, but generally, i don't find such wedges/triangles too helpful, as it depends on the anchor timeframe.
lastly, I couldn't see any bullish mat hold in the candlesticks for 29/30 march, as the closing was 0.5c below the previous day.
Aside from that, are we expecting a flag/pennant in the days to come, or can we expect it to continue its upsteam for consecuetive days? Long term wise, my indicators say it's still positive to hold/buy, although I haven't confirmed the fundamental ratios yet, as a MOR trader.
This is part of my own technique which I have researched and discovered a relationship between market news and price behaviour. It's not standard teachings from the textbook; rather you won't find this in books.
Let me copyright this first before I go further
You are not allowed to republish the following (below) without permission of my written consent.
How does one tell the difference between a common gap and a breakaway gap? At the initial glance, it is really hard to apply the theory practically.
Common gaps will be covered eventually.
Breakaway gaps don't (This however, contradicts the technical point that all gaps will be covered) or rather I would say, not so soon.
Breakaway gaps occur when the gap up is news related. Look at the charts for
China Hongxing at 17th Apr 2006. What happened here? The company announced a placement to investors. But what's important in this placement is that there is a condition that it will meet profit targets set out in the announcement up till 2009.
China Hongxing at 10th Nov 2006. What happened here? Research report coverage on the stock.
Sino-Environment at 14th Dec 2006. What happened here? Announcement of some acquisition to boost production.
Pacific Andes at 26th March 2007. What happened here?
Announcement of acquisition in China Fishery.
Labroy Marine at 13th March 2006. What happened here?
Announcement of first rig project.
Epure at 22nd Nov 2006. What happened here?
Research coverage issued on the stock.
Chemoil at 29th March 2006. What happened here?
Research coverage by JPM.
Inter-Roller at 3rd April 2007. What happened here?
Research coverage by Morgan Stanley.
There are many other occassions where such events have occured in the past, but what is crucial is the price behaviour. All these stocks gapped up from the open and usually see substantial gains. The reverse is true, i.e. profit warnings, bad news etc.
Their opening prices are also usually the low (for bullish breaks) and highs (for bearish breaks). When breakaway gaps occur, no supports and resistances will hold and sentiment towards that stock is usually manic/panic.
How do we trade this?
We buy/sell (depending on the news if its bearish or bullish) at the open with the condition that
- the stock MUST gap up/down
- the preceding chart formations look ok to support a breakaway gap, market depth etc.
- cut loss at 3 bids below open price
- no upside target. Just ride with it and monitor intra day for signs of weakness
FJ Benjamin gapped up this morning on news that GS covered the stock with a strong buy rating. I'm just basically repeating the same process I did yesterday with Inter-Roller and Pacific Andes not too long ago.
Labels: Stock Trading System
