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As I explained earlier.... this is a swing trade for me. There are no dividends associated with this stock so there is no "compensation" when the stock is in decline due to consolidation after a run... also this is a base metal mining company (Zinc, Lead, Nickel) the demand for these metals is not huge at the moment... so to me this is a wonderful mine to play....I am going to make a decent profit for the second time in the last 8 months and will continue to watch for another opportunity later... as base metal mines go this seems to be a good one.
When investing in a company that has a commodity as its major product, it is prudent to watch the price of that commodity(s)...if the price of the commodity rises then your company's stock should follow....ditto if the commodity price falls. If the price rises significantly for the commodity but your stock fails to respond..... time to find a better stock for that commodity
As you can see...Nickel prices are rising, lead prices also but less and Zinc has been in a rise for a while and declining slightly. The big demand is not there but at least there is some demand.
Here is the intra-day on Lun.TO
You can see that we started the day with a pullback but it is fighting back and almost back to Friday's close.... If the price breaks over $5.85, I will raise my limit stop-loss range by $0.10 to a range of $5.65 to $5.67. I am going to eventually sell this stock but I am giving it a chance to rise more.....if it does not rise to $5.85 I leave the stop-loss alone, no matter what it falls to.
Badger Daylighting [TSX:BAD]
This pesky resistance around $33.00 is a pain in the ASSets Here is my trigger chart
We are comfortably within the BB envelope but that 200daySMA at $33.00 is becoming a formidable resistance.
The red circle shows the struggle there. The blue circle shows the MACD and BBwidth to be still strong but especially the BBwidth seems to be weakening a bit. These two must reverse direction before it can be shown that the run is over and it is certainly premature to say that. Staying above $33.00 for most of the day and closing above would be great....always when a strong resistance is permanently breached the rise is very nice.
the Slow Sto is 100% bullish and no matter what happens to the MACD and BBwidth , if the Slow Sto stays over 80 all is well..... this indicator staying over 50 during a consolidation is a main reason technically to hang onto the stock until the next BB squeeze.
Here is the intra-day chart
As you can see we have a nice gain so far of $0.21 from Friday's close and battling that $33.00.... this constant attack leads me to believe the resistance will fall.... I think of it as a battering ram on a door....eventually the door breaks.
Good trading
Can you help answer these questions from other members on NexusFi?
Ok....the drop yesterday in BAD.to and others was just collateral damage because of the 100+ drop in the TSX. The American exchanges were slightly positive at the end of the day but not the TSX.
I thought I would look at the TSX while waiting for the intra-day charts to settle down.
You can see in the top right corner where the 100+ drop occurred...not serious but it does affect Canadian stocks. We are recovering this morning so some of those losses should be recovered.
When I see, that drops in share price are due to a decline in the exchange index and not due to the company itself, I just shrug and do nothing. Not the company's fault...just nervous investors.
I thought I would reinforce some of the things we talked about over the last 6 weeks. A very nice shorting opportunity if you were shorting the index. A very clear start to the short (Slow Sto falling below 50, MACD with neg slope and BBwidth turning positive slope. The index value hugged the lower BB and the end could not be clearer with a MACD/BBWidth pinch with a rise in the Slow Sto later.
I actually drew that green line prematurely by a day or 2 but why did I do that???? Well the plunge below the lower BB by the index value , have the heads up that the formation of the pinch, which looked to be happening, would in fact happen.... we have seen such a bottom finding ending quite often now.
So that is probably a decent short...(though I do not short )
ALSO note what happens after the end of a run.... beit Bull or Bear... it marches back to the 20daySMA.... so typical.
One day I may capitalize on this brief swing trade.... right now I do not... I generally want larger gains and look for a stock in a break out situation... but I might here as an experiment when I have a bit of cash lying doing nothing in my Fantasy account.
right now... quickly looking at my L2 chart....BAD.TO is being bad but LUN.TO is doing fine.....more about that in an hour or so.
1. Extra money lying around in cash in my portfolio (if you back up to Friday's post you will find I am basically "all-in" the dollars I have in the cash portion of the account are not worth investing in a $30 stock( the $1000 or so in the account would by about 30 shares.
2. A feeling that there was a significant rebound in the offing.... right now if I look at BAD.TO, though I really like the stock overall.... I think there is a lot of profit taking going on, so while I will hang onto this stock long term... right now is NOT the time to add to the holding.
here is the chart as it stands now
See the shape of the MACD and BBWidth.... they are reversing direction.... this bullish run is over... the $33 resistance won for the time being.
Now see the red arrow I drew.... this is where I see the stock headed now.... towards the dotted green line, the 20daySMA. Look at the Slow Sto... currently it is fine where it is as it it is above 80...so this stock is not going to plummet and lose all profits for me. If it were in steep decline I would sell and take my money and wait it out to see how far it will fall. But I expect it to fall to that 20daySMA then go sideways as the BB's get tight.... at that point if I have significant money and things look good I would add to the holdings....if they look bad I would sell.
I know this runs contrary to a day trader's philosophy but my philosophy is longer term. I accept some losses as I view them temporary .... it is what the portfolio in general is doing rather than an individual stock that is undergoing temporary difficulty due to profit taking.
This is an extremely solid company that underwent a 3:1 forward split about a year ago. I owned this company's stock a long time ago when it first got its feet under it.... I bought it 2004 when it was about $5/share and sold it (foolishly as it turned out) when it start falling from $26/share in 2012.... I made a lot of money off of it especially when you add in the accumulated dividends over those 8 years.... but then I stared at it as it rose to over $100/share before the split. I did not think the rise would last and I have a philosophy of not chasing a stock after I sold it.
Also back then I did not like buying stocks at prices greater than $10/share.... so I waited and the stock price has fallen (due to the split and downturn of the O&G industry) to an affordable level. I since have changed my philosophy regarding buy-in prices for stocks and routinely buy in the range of $10 - $50 now if I see the solidity of the company.
But to answer your question.... it is not the time to Buy Badger Daylighting I would wait until this downturn ended and the stock showed signs of another bullish run. If this blight on the Oil and Gas industry turned around....yeah yeah I know you are swimming in the stuff in the USA with advent of Fracking... but the down turn in oil prices is hurting Canadain O&G industry and this dithering over the various pipelines (Keystone is only one of them) is hurting Canada's ability to serve world markets. Were it not for these problems BAD.TO would soar again...
But I can wait.... here as well as in my real holdings.
I was going to quit for the day and leave to do other things but before I did I decided to play around a bit on Level2StockQuotes.com
look at what I did
this site is pretty cool as I can monitor about 8 charts at one time (there are six more like the small one in the upper left hand corner). the little ones and the one at the bottom left are basically rel time whereas the one on the right has a 15 minute delay...however I can reproduce my complete "trigger" chart here... it has to be a 5 min chart as a 3 min chart is not an option.
Notice in the chart on the left the sudden drop in price in that purple circle on the left....Where did it drop to.....yep, below the Lower Bollie.... is it a head fake??? well you can see it was a head fake as the price reversed to $31.74 minutes later.
But look at the 5 min chart with the 15 minute delay.
The Slow Sto started a severe decline... if that is all you were following you would probably bail at that point.... But all indicators lie to you.... that is why a consensus is soooooo important.
Look at the MACD when that drop finally occurred....hardly moved a muscle
Look at the BBwidth..... barely a ripple
So if you were following this stock in "real time" using the complete trigger chart, you would recognize that drop for what it was... "a head fake" and not sold prematurely.
It is so important that you watch for the completion of the sell signal.... falling Slow Sto, Falling MACD AND rising BBwidth
Without all three it is not a sell.... consensus is the key when using indicators.... that and discovering how your selected indicators interact....not all combinations are useful....however even though they don't play well together if you choose indicators that don't give the same chart look...then a consensus of those indicators is a good "sentiment test"
you know, i've noticed that the longer a stock is in consolidation, the MACD will go towards 0 just because the averages converge, yet the stock is not really dropping (or rallying). That's why I don't trust it, sometimes it drops because the stock is dropping, sometimes it drops because it's consolidating. It does seem to help to have the BB in there to look at consolidation. Are you familiar with the BB squeeze indicator?
I had a look at a NinjaTrader video and it seemed quite complicated to set up and when you boil down the purpose of this indicator in Ninjatrader it seems to be nothing more than identifying places of breakout
My trigger chart is a lot easier to read and I can easily recognize the "head fake" on about Aug 11 by the muted response of the BBwidth to that drop in price for the previous 10 days and the drop below the lower BB.
No problem breakout on May 21 with the rising Slow Sto and MACD followed by the trigger the sudden rise of the BBwidth....
I would have not any trouble holding that stock until Sept 23 when there is a clear sell sign I might have even pulled the plug on Sept 8 with the sudden drop of the BBwidth with the fall of the MACD/ Slow Sto...which begins a short opportunity with a clear end on Oct 15 with my BBWidth/MACD squeeze (including a price that dived far below the lower BB)
I am not saying that this NinjaTrader indicator is not a useful tool...but it is doing nothing that I cannot do with my "trigger chart" and I think I can draw a few more inferences using my approach. I don't really like Kelter channels over Bollies...I made that decision years ago and having them both on a chart makes them very messy and hard to read.
Just read and test what I have discussed starting here
Ok....now that we have that out of the way...let us discuss something productive.
Those of you that seriously want to understand how I read a chart and how I use indicators will get a lot out of the following discussions.
My goal here is to:
1. Get …
I don't think you have taken the time to go through all the detail and examples that I have show....Once you play with that chart and use the simple rules I developed you will see how well the Slow Sto/Macd/BBwidth indicators work together...and SMAs and BB overlay and you have a really powerful chart for predicting stock price movement.
The Bollinger Squeeze is not bad, but all it does is try to show when the Bollinger width has gotten narrow enough to be significant. That's what the comparison to the Keltner, which is slower to change, is supposed to tell you. I think that a person should have no particular trouble seeing that just by observing the BB width, or the pinch in the Bollinger itself. I don't think it would add to what you are doing, which combines a number of things together.
As an indicator, with a plot of the difference between the Bollinger and the Keltner, it has been done here and there for different charting platforms. A version, with a momentum indicator incorporated into the design, was promoted by a vendor who likes to sell very expensive indicators on the web. The funny thing is, it's so simple you don't have to pay a nickel for it, just plot the two bands on a chart. Oh well....
Thanks Bob for confirmation of my quick search of this method.
My approach to charting is simplicity in look without removing information from which further inferences can be made.
In looking at overlays for the main chart, Bollinger Bands stood out head and tails above the Keltner channels. ATR and BBwidth are both measures of volatilty...the ATR is used in Keltner Channels and of course BBwidth is part of Bollies. The next chart is a comparison of the two methods with Bollies/BBwidth on the left and Keltner/ATR on the right
I created 5 areas of comparison to discuss here
(1) Here is a breakout of this stock. It does not take much discussion to show that BBWidth and Bollies are superior in revealing the breakout.... the bollies are tighter at the breakout and explode out faster than the Keltner/ATR combination
(2) here the share price is on the outside of the Keltner channels showing bullishness...which is fine as such but I get just as much info from the share price hugging the inside of the upper Bollie.
What I am missing in the Keltner chart though is the nuance that I get when a share price moves above the upper Bollie...when that happens I KNOW a pullback is coming soon (rarely beyond 5 days usually in 2-3 days) and by watching how that pullback occurs I can judge the continued bullishness. of the rise.
Note the BBwidth action compared to the ATR under area 2.... YOU GET Nothing from the ATR as to the status of the bullish breakout.... the bollies show a much longer pos slope diminishing as the max of the run occurs..... much more information on the Bollie side. You could use the max of the bollie slope to predict the end of the run. If you used the ATR you would have sold a way too early
(3) See how one can anticipate the next volatile move of the price with the BBWidth. The BBwith is returning sharply to its low point and then suddenly reverses..... the ATR is flat throughout until the breakout...no warning of a potential breakout ....basically the same reading from the middle of the bull run until the negative breakout
(4) Well I will say the ATR gives a better indication to the end of the negative breakout. But I would have predicted that with the degree to which the share price was below the lower Bollie... the Keltner channel almost covers this important piece of information.
(5) Is there much of a squeeze in the Keltner chart showing the most recent breakout...the ATR is flat. there is a definite pinch of the bollies and rise in the BBwidth.
This is only one chart comparision.... I made many many more in my study of overlays and indicators and rejected the Keltner and ATR in favour of Biollinger bands and BBwidth.
I see absolutely no advantage to my ability to read the chart by wrapping the BB's inside the Keltner channel.... doing so just clutters my chart making it harder to read.
I am not knocking the indicator for NinjaTrader and the Price Action method....it just does not fit in with what I do.
Oh well....