Journal

January 13, 2013

I Will Be Watching $SHLD This Week (Update 2/4)

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Written by: Kay Kim
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1.13.13 Sunday

 

Bullish Divergence in the Making

(Stoch, RSI, MACD, MFI)

1-13-2013 1-36-19 PM

We could retest $39 level as support again this week before pop to the upside

Watch 20EMA

1-13-2013 1-39-29 PM

20EMA has been acting as strong resistance for about a month now so must close above that area to confirm some bullishness coming into this stock.

 

1.14.13 Monday 9:41AM CT

 

Entered Long Positions Earlier @ $42.56

1-14-2013 9-42-55 AM

Currently trading above 20EMA. Closing above $42.60 will give some great leverage going into tomorrow.

 

1.16.13 Wednesday

 

Obstacles Ahead

(50EMA-Pink)

1-16-2013 2-31-27 PM

We’ve had nice upside move last three days however we are going to face yet another obstacle to overcome.  This one isn’t going to be quiet easy as we have double confirmation of resistance.

  1. $47.30ish Pivot (old support becomes new resistance)
  2. 50EMA residing in that $47.30 vicinity

Few things could happen here tomorrow and Friday.  We could see some retracement to gather some momentum to try again to break that resistance to the upside next week or we might just push through strongly tomorrow   As of today, it is looking very strong but tomorrow is going to be a interesting day to see how $SHLD is going to react when it faces that pivot at $47.30ish (red line).

 

1.18.13 Friday

 

Still Holding Full Positions

1-18-2013 3-34-21 PM

Technical 101 = “Old support becomes new resistance”

That’s where $SHLD stopped trading today just beneath the new resistance.  We’ve had great 5 days of bullish run and that’s a good thing but we have a huge problem.   Volume… Like I always like to say, “Stock rose, volume decreased, stock falls” and there is high probability of that happening because we are running into a strong resistance (old support).  So going into Monday without any kind of fuel (volume) isn’t going to help.   Either it needs to gap up thus just avoiding the contact with the resistance or two things going to happen.  One, probably it will consolidate in that vicinity until it decides what it wants to do. Two, it’s going to roll over (My stop is just below 10EMA in-case it does). I will be watching closely intra-day on Monday.

 

1.25.13 Friday

 

GRINDING…

1-25-2013 3-16-52 PM

What do you make of this formation?

  1. Tight rectangle pattern
  2. Stair-step continuation
  3. Rolling over
  4. Nothing.. Just griding

I think all the above is correct answer.  It’s really hard to pin point what formation it is but definitely there are some confusion of which way it wants to go.   Break below 20EMA (green) would be bearish back down to the $39 vicinity or we break above current resistance of $47, would be bullish.   I don’t know where it’s going but we shall find out next week.  Still holding full bullish positions (tightened my stop though).

 

1.28.13 Monday

 

BROKE OUT

1-28-2013 3-17-59 PM

Well I guess the answer to my last question was that it was the stair-step continuation pattern but you know something about technical trading. It’s very similar to a basketball game.  You shoot a fade-away impossible shot at the buzzer to save your team from losing and you miss it, you are a dork for pushing your luck.  However if you make that impossible shot and your team ended up winning the game, you become a hero because you’ve made a tough shot and made the right decision.  Funny right?  Well to be honest, this $SHLD trade could’ve gone on either way.  I just got a lucky break that it happened to go higher.  But also keep that in mind that I did bet on the upside because ultimately I was betting on that track record of the bullish divergence that we have on this stock.

Volume is not impressive as I’d hoped to be and that’s a concern going into tomorrow.  Hopefully we can get some follow through to the upside but I will be watching closely.  Great move today nonetheless.

 

1.30.13 Wednesday

 

Still Holding Positions /Possible Bull Flag

1-30-2013 3-32-35 PM

10EMA (blue) and 50EMA (pink) seems to be holding the bears so far and the volume has been decreasing continually which I do believe that possibly we are forming a bullish flag.  If we close below 10EMA tomorrow, I do believe we are going further down.  My stop has been tightened and let’s see how it plays out tomorrow.

 

1.31.13 Thursday

 

Added More Calls @ $46.26

2-1-2013 7-33-50 AM

10EMA (blue) and 50EMA (pink) united along with recent uptrend support.   This is very important when the stock meets 2-3 supports that could help them out and that was why I added more calls on Thursday morning when it cleared 50EMA (pink).  Also my risk/reward ratio was great.  My stop was just below 10 EMA so by adding more calls when it cleared 50EMA, I was only risking less than a dollar to make much more. It’s headed to $50 and that bull flag is playing out very well.

 

2.3.13 Sunday

 

10EMA and 50EMA Crossing

2-3-2013 11-41-24 AM

10EMA (blue) and 50EMA (pink) are just about to cross here. When they are fully crossed (by separating each other), it is indication of another bullish run.    If you check your past daily chart, you can find that last 4 times when 10EMA crosses 50EMA, it turns into another bullish run.  And that does not mean it has to play out but it does mean that it has high probability that it will.

 

2.4.13 Monday

 

Stopped Out @ $46.15 with Profit

02 Feb. 04 11.58

I thought I would able to get more out of this trade but still very good ROI.  I have no plan to go long again as I see that the market is starting to retrace.



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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7 comments
LittleRiver
LittleRiver

HI Kay. I  wondered if you would share exactly by how much  you tightened your stops ? From what to what? Preserving capitol is the name of the game with these stops and I am hoping to learn from your example. 

 

Noticed JCP is pretty much in the same place with it's flag perched right on the 10EMA too. It seems to have a little more breathing room. Both plays great calls perfectly timed!! Fantastic Kay!!

LittleRiver
LittleRiver

Sure looking really bearish and out of steam. Tomorrow's claw will be one to watch. 

2kaykim
2kaykim moderator

 @LittleRiver just below 10EMA is my stop and I actually added more calls yesterday because risk/reward was great (my stop being below at 10EMA)

2kaykim
2kaykim moderator

 @LittleRiver $47 is a major pivot area where it has been used as strong strong support in the past and now acting as resistance. Either it rolls over or it pushes through. Will see.

LittleRiver
LittleRiver

 @2kaykim I see......Thank you Kay for sharing your strategy. I plan to put all this knowledge to use one day. I feel fortunate to have found your site. After spending much time looking on the web for good info on trading , I have to say the information you have shared here on your site is the best anywhere. Thank you!!

 

I am  beginning  to see this risk vs reward your talking about, as I look look at different equities to play and their price placement on the chart. I find it funny the stocks being most pumped by many analyst are already played out looking thru the prism of TA. Perfect example is Fidelities "bull of the day", DEM.  While your pics are obviously just starting to run. It is becoming more obvious which are the better plays but it is still a stretch for me. I hope in time it will become second nature. Time will tell.