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Let's look at a couple of shipping stocks for buy/sell signals. (September 12, 2013) - YouTube
Channel: Stock Market Mentor
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I want to look at a case of what I
call "the can't help its."
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When traders get a bad case of the
"the can't help its,"
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what I'm talking about is, they look
at a stock,
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they know they
shouldn't buy, but they just can't help
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it. And so finally they do buy
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and what happens? Well, the stock tops out
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and it drifts lower and you're thinking,
"Well, I knew
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that that was going to happen but I just
couldn't help it."
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What I'm suggesting is, just don't do
that.
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There's a couple examples here, a
couple great examples here
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in the shipping stocks. Look at
DryShips ( NASDAQ:DRYS ) here,
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see how this stock was in,
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I won't quiet call it a volatility squeeze,
but it was trading
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fairly tight. That was a little
over $2.00, we'll call it to 2.10,
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then it broke out, ultimately it has run
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clear up to 3.25 before pulling back.
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So, as this stock breaks out it's
okay to be buying it
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a little bit here.
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Most the time
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you're not going to get the stock right
at the ideal buy point, but you can get
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it pretty early if you're watching it.
But what happens is,
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traders may not see this move, you don't
see this little pullback.
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What you see is this move, right about
here you start picking up on that
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and you say, "Man, I was looking at that stock
right when it was back here waiting for
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to break out, it
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never did, I lost sight of it, oh man, what
a dummy."
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So you go ahead and buy it here, or maybe
here. You're looking for more,
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maybe you wind up making a little money
on it, but probably not because guess
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what?
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Guess where all the volume is?
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All the volume is on this last up day and
then the big old bearish engulfing
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pattern,
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the big old reversal here. So this was
definitely a climax high
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that you had to kind of see coming if
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by no other way than looking at how
extended this was,
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not just above the 200-day moving
average, the
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200-day moving average is at about
$2.00 or so, the
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stocks up at over 3.00, so it's over 50
percent extended above its 200-day
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moving average.
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That's not the thing that should really
make your
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hair stand up; it's a
fact that its
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so far extended above the 50-day average,
which is the faster
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indicator here; so even on this 50-day
moving average the stock is really
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extended. Now, let's look at DSX ( NYSE:DSX );
it's a little different type of trade.
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This one was parabolic, it looked like a short
squeeze, but by the way,
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here's the short interest. So it really
wasn't a short squeeze, this was some
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kind of buying here.
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Now, Diana Shipping
( NYSE:DSX )
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is a different deal. It was trading in
sync, for the most part,
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with DryShips ( NASDAQ:DRYS ),
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but it hasn't been so
extended.
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So here's the deal on
Diana Shipping ( NYSE:DSX ),
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this is the stock that I would be more
interested in buying
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on a pullback, not so much
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DryShips ( NASDAQ:DRYS ),
just because the stock is
still so far extended.
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So with Diana Shipping ( NYSE:DSX ),
Cramer
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covered this a long time ago, I think
back in March,
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somewhere around in here, on Mad Money. I
showed him my work
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and suggested that it had a minimum
price target of $14.00.
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It hasn't quite hit that yet, and it may
not hit that, although I think it will.
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But what you want to do is wait for the
stock to pull back.
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Where has it bottomed before? The 20-day
moving average, it
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even fell a little below here. But you
can see how the real time to buy this
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stock is at the 20-day moving average,
which right now
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is about 11.50. My bet is
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you're going to get it test of the 20-day
moving average
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sometime within the next couple a days.
So you want to wait
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until you see the first open bar,
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in other words like
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the clear green bar, the open green bar.
What this indicates
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is that the stock opened low and closed
higher
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then the open. That tells you that
there's been a reversal, you can see
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how this stock
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trended lower here, all these red
boxes,
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and then the first open box here, that
was to buy point,
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then you get a move up here. So
you're going to look for this over here
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and that's really when you'd want to be
looking to buy with a stop,
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an appropriate stop, underneath that
established support level.
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