Journal

December 8, 2012

Consolidation Means Break-Out $CMG (Update 12/19)

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Written by: Kay Kim
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12.8.12 Saturday

 

Prison Break

When it comes to TV Shows, I am a late bloomer.  I always watch TV shows that has been ended for years.  I remember my friends telling me how good the Prison Break was many many years back but I never got into it until recently as I found full 80 episodes on $NFLX!

Primary reason I don’t like to watch TV shows while its airing is because I don’t like waiting for the next episode. You know how it always ends with the BIG QUESTION.   What’s going to happen next??? and then you are kind of dumbfounded like a deer on a bright headlight knowing that you won’t find out until next week.   I guess I hate that.  Anyway, I got into Prison Break last few weeks and I really like the story line and the characters.

So the BIG QUESTION for the next week is…

Is $CMG going to have Break-Out plan next week?

I don’t trade $CMG or $NFLX on a regular basis but I do like to trade them for Break-Outs. They tend to have huge moves up or down when they break out and I like to ride that volatility.

So here you can see that we have been forming this symmetrical triangle pattern here.  This is great pattern for a break-out play because as you can see the volume is evaporating, the trading range is getting tighter and tighter.   And you know what?   Bollinger Bands are SQUEEZING. When they are squeezing, you know the pressure is getting HOT.

Take a look at that.  It’s going to stay flat as it’s going to come up with break-out plan as Scofield did for his brother on Prison Break.   And when it breaks, I want to make sure I am there to go along with a ride.  Maybe lots of money is there waiting for me outside world.

Reconfirming possible break-out, this is how.  You see all these Oscillators are at a neutral?  They are moving sideways and that’s how you see momentum isn’t in any direction because $CMG is digging the hole.  When it breaks-out, you will see these Oscillators moving in one direction WILDLY.

 

12.12.12 Wednesday

 

Taking A Detour?

12-12-2012 4-30-54 PM

Looks like $280 has been acting as strong resistance last two days.  Today and yesterday, we closed with Doji with not much price action.  I do think if we break above $280, It probably will move pretty wildly. BBands still squeezing very tightly and the stock is just very slowly moving sideways.     Break-out plan is still intact but possibly needs some more time to re-evaluate things.  However it’s possible we might consolidate more days before it breaks out.

Last 9/6/12, when this stock broke out very aggressively to the upside, it was the day when Dow Jones Index broke out to the upside as well. So I am wondering if it’s waiting on Dow Index to make a move first so it can follow it.  The similar aspect of $CMG and $DJIA today is that, both are at it’s very pivotal point.   If Dow starts to tank this week, I think possibly $CMG will follow but conversely if Dow breaks to the upside, $CMG likely to follow looking at the sentiment of how it broke out last September.

 

12.17.12 Monday

 

They Are Breaking Out!

(Entered bearish @ $285.75)

Stock Market Technical Analysis - Traders Club - 13 Dec. 17 03.04 PM

I entered bullish just about 30mins before close today.  And looks like they are finally breaking out and good timing as the market soars, $CMG also soars.  We also have confirmation through Bollinger Bands break (see arrows).

Be cautious because we are trading just below 100SMA and also volume is weak (compare to its move today).  We would really need some good volume spike to confirm the continuation tomorrow.

My target is around $330-$340 area.  Overall looking good for tomorrow.

 

12.18.12 Tuesday

 

Going As Planned But We Need…

12-18-2012 3-44-46 PM

We do have a rising volume (yellow shaded) which is a good sign and that was one of the reason why I am still holding my Call Options here despite the fact that we are running into short-term resistance (yellow dotted line).

This is what needs to happen tomorrow. A HUGE spike of volume like you see on that red arrow on early September.  We don’t get that tomorrow, we probably looking at some sharp pull back of some kind and since I am not trend trading but a break out trading, I will not want to hold through a pull back.

I will be watching very closely tomorrow and see how it behaves and if can get some more buyers through that short-term resistance area, I am willing to hold. Otherwise I will be out quick with my gains.

If however, we can get good spike of volume with price action to the upside, I am pretty confident that we could see $340 area and that area is going to be a major pivot.  200SMA is also residing in that vicinity so that would be my ultimate target.

Bollinger-Bands Trending

12-18-2012 6-48-22 PM

BBands continue to trumpeting out and $CMG is trading outside of the Bollinger-Bands.  This is good indication of Bollinger Bands break-out trend trading.  What we want to see next few days is for the bands to continue to separate and continue to develop trumpet formation (bands separating).  When the bands starts to come together, that’s when trend is dying and the momentum is shifting.   Anyhow looking at this BBands, looks like the trend is going to continue tomorrow.

DMI also shows great strength really liking this move.  DMI is one of my favorite indicator I use when I want to check the strength of it’s recent move and as you can see DMI really likes this move.

 

12.19.12 Wednesday

 

Losing Momentum, I Am Out

(Closed out @ $291.64)

Stock Market Technical Analysis - Traders Club - 13 Dec. 19 10.34 AM

What a drag… Possibly we could continue but I think we are losing momentum in this break-out play. I wasn’t interested in trend trading on this one so I am out as I can see that the momentum has starting to decay.

 



About the Author

Kay Kim
Kay Kim
Kay Kim is a full time equity market options trader/investor, the Founder of TrueVine Capital, Inc. and the Owner/CFO of Lucky Klover, Inc. Kay has been involved with the market since 2007 with extensive research and development on technical analysis. Though Kay may not have 20+ years of experience, he makes it up with his in-depth technical analysis knowledge and long-term forecasts.




 
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17 comments
solonik
solonik

 @2kaykim  What u think about hanging man formed today on BAC daily chart?

followkim
followkim

Hi, Kim I have no time sticky with market today, but I finally bought CMG at $282.23 even thought the volume wasn't good enough followed by today breaking-out. but the price action is strong. the weak volume still concerned me somewhat, so I would like to know if the volume haven't follow the price action increasing in the coming sessions, what could be happen next??? Thanks Kim !

2kaykim
2kaykim moderator

if we can get increasing volume next 2-3 days, this break out play could make us fortune

2kaykim
2kaykim moderator

I wouldn't try to guess which way its gonna break.. its been whipsawing lot of people.. waiting for the full confirmation and then jumping in wouldnt be too late

kidderek
kidderek

2kk, which way do you see cmg breaking?  up or down?  or do you think a straddle is in play?

servopump
servopump

Hi Kim,

I see a bullish divergence on the daily MACD (7/26) to (10/24), but I think that the symmetric triangle should signal a continuation. So small pause before more down move? Possibly the triangle will grow small double bottom?

followkim
followkim

Wow, Kim I even don't know you are a great writer with such strong lively describe on stocks..I love it !!! you made me want to watch that TV show " Prison Break " tomorrow if I have time,hahahah.... Thanks for lets us know the possible break out might be happen on CMG, I will watch very closely next week,also would love to ride it onto up mountain as you will do:-). you know what Kim? I really think you should write a book about how to use the best tech skill to trade stock. something like that. and i bet your book will become best sell !!!!!

solonik
solonik

@kay David Einhorn pushed CMG down to floor with his short position... BTW Kim I watched the whole season of Prison Break like in one week its sooo interesting... Check out "24" and "Damages" those are really interesting too...

 

2kaykim
2kaykim moderator

 @solonik i really dun classify that as hang man bro because we don't have any major resistance there 

2kaykim
2kaykim moderator

 @followkim Thats good entry Liya.  well volume isn't terrible but it isn't good either. at least its increasing compare to yesterdays volume.   Take a closer watch tomorrow morning and see how it behaves.. if you are not so comfortable going into tomorrow tighten your stop according to your trading risk reward ratio. looking at BBands, it looks like solid break out.  I will be watching closely tomorrow as i have heavily positioned calls right now.   If I don't see volume coming in tomorrow, I will be out pretty quickly. Or If I see any hesitation on its behavior and also I will be watching the market closely as well.    watch closely tomorrow. its very important because we are not trend trading on this one but break out trading.

2kaykim
2kaykim moderator

 @kidderek like i said on my this post that nobody knows which way its gonna break but will be watching it closely cuz once it breaks out, u wanna ride it that way.  I only trade straight calls and puts for maximum profit.

2kaykim
2kaykim moderator

 @servopump hmm yea i do see MACD bullish divergence.. and $CMG is stuck on this triangle consolidation.   for me though, i guess i really don't care which it breaks out as long as it does break out.. i wondering it though if that divergence has lost its potency because the stock has been tamed on this consolidation. good find tho.

2kaykim
2kaykim moderator

 @followkim haha thnx~ u r always so kind with ur words liya~ =)  maybe someday i will write a book and because u were the first to recommend it, I will mail you my first book (could be in 20 years lol) for free! =D

2kaykim
2kaykim moderator

 @solonik  24 is good show bro! I've been hooked since about a week ago! ill check out Damages next 

followkim
followkim

 @2kaykim I'm so grateful to you Kim for always giving your help when I need you!! OK I got it and will do what you told me on CMG. Good night !

followkim
followkim

 @2kaykim its not the words that I said to you are so kind, That is the best works that you have done for us is so kind.....you know what you makes me become a much better and smarter  trader since I followed with you!!! compared the books( 10 more) that I had been read already in the past with your analysis by following the current market movement day by day, I felt that you have much great and better vision than others. that is basic on the most important tools of the  tech charting analysis that you had brought into ur works and they are the BEST WELL DONE ANALYSIS I haven't see and learn from others. I had learned lot from you! So THANKS AGAIN! Please take time and write your books now, Oh, 20 years is too late:(,hahahaha.. I wish I can have a free copy your book in 2014:-) I had read  CMG chart yesterday just as you pointed it is in the accumulation with low volume quite well for couple sessions at the past...only once I had traded CMG in short position last year with nice gains, would love to trade it once more in the long side, will wait to see. 

2kaykim
2kaykim moderator

 @followkim thanks again.. i think u got great work ethic and great attitude and if you keep at it, i know you will do great on TA~ =)  im still learning alot for myself since I dun have 10-20+ years market experiences like the other OGs out there but I am studying very hard and hopefully in the near future it will pay off.  and yea i do have passion for teaching, u probably caught that on my articles (so one day I would love to write a book and teach TA~