So, what does this really mean for traders? It might be time to short the stock. The streaming chart, courtesy of BigCharts has shown us three technical indications that the stock will continue to fall.
First, the most obvious one: the trend line has been breached, and on strong volume too. Second, both the lower indicators I use have gone negative. The Moving Average Convergence Divergence (known as MACD) have shifted into negative territory. The MACD 12,26 has increased above MACD 9, that is, the red line has gone above the blue line. Finally, the Directional Movement Indicator (known as DMI) have crossed into negative territory. This occurs when the negative DMI crosses north of the positive DMI, that is, the red line goes above the blue line.
When trading, I never buy or sell when only one of the two lower indicators signals, but both. Good to see that they both crossed today.
The stock doesn't have much to fall, but maybe try to catch a few dollars on the way down. I would like to wait for the Bollinger Bands to also increase in range or start trending downwards for a longer-term shorting opportunity. For now, I would say short it until it reaches $82 and buy to close.
Note: Toronto Stock Market requires shorts to be filled on an up or even tick.
First Quantum (FM) Trading Opportunity
Yesterday afternoon, I contemplated shorting Quantum Minerals [FM:TSE] because it had such a huge run, but I decided not to, because I am not a fan of going against momentum. By mid-day trading today, the stock dropped more than $6 or 6.5 per cent on two pieces of news. Sometimes you just gotta go with your instincts...
This morning, the company announced a legal update to its mine in Congo. In usual fashion, the wording is vague, but it seemed like the system was not in favour of the company.
First Quantum also informed share holders today on an update on the Kanshashi copper-gold mine in Zambia. The problem with these reports is that they put a spin on it, and for the average person, like myself, these tables, charts, and figures can be confusing.
However, some key words can be found in the report that emanates negativity, which can be found in the "notes" at the end of the report.
"1. There is less geological confidence associated with gold, which is due
to the smaller data set plus the sporadic or "nugget" occurrence.
2. Based on the historical production of gold at Kansanshi, it is necessary
to include it in the mineral reserves to allow effective mine planning,
design and scheduling. However the reduced level of geological
confidence should be acknowledged."
Strip ratio also increased, which many consider negative as it decreases the likelihood of open-pit mining.
So, what does this really mean for traders? It might be time to short the stock. The streaming chart, courtesy of BigCharts has shown us three technical indications that the stock will continue to fall.
First, the most obvious one: the trend line has been breached, and on strong volume too. Second, both the lower indicators I use have gone negative. The Moving Average Convergence Divergence (known as MACD) have shifted into negative territory. The MACD 12,26 has increased above MACD 9, that is, the red line has gone above the blue line. Finally, the Directional Movement Indicator (known as DMI) have crossed into negative territory. This occurs when the negative DMI crosses north of the positive DMI, that is, the red line goes above the blue line.
When trading, I never buy or sell when only one of the two lower indicators signals, but both. Good to see that they both crossed today.
The stock doesn't have much to fall, but maybe try to catch a few dollars on the way down. I would like to wait for the Bollinger Bands to also increase in range or start trending downwards for a longer-term shorting opportunity. For now, I would say short it until it reaches $82 and buy to close.
Note: Toronto Stock Market requires shorts to be filled on an up or even tick.
So, what does this really mean for traders? It might be time to short the stock. The streaming chart, courtesy of BigCharts has shown us three technical indications that the stock will continue to fall.
First, the most obvious one: the trend line has been breached, and on strong volume too. Second, both the lower indicators I use have gone negative. The Moving Average Convergence Divergence (known as MACD) have shifted into negative territory. The MACD 12,26 has increased above MACD 9, that is, the red line has gone above the blue line. Finally, the Directional Movement Indicator (known as DMI) have crossed into negative territory. This occurs when the negative DMI crosses north of the positive DMI, that is, the red line goes above the blue line.
When trading, I never buy or sell when only one of the two lower indicators signals, but both. Good to see that they both crossed today.
The stock doesn't have much to fall, but maybe try to catch a few dollars on the way down. I would like to wait for the Bollinger Bands to also increase in range or start trending downwards for a longer-term shorting opportunity. For now, I would say short it until it reaches $82 and buy to close.
Note: Toronto Stock Market requires shorts to be filled on an up or even tick.
Tuesday, March 30, 2010
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3 comments:
I should have shorted while I wrote this article... haha. I started at 86.50 and now it's 85.90.
fraggin man your amazing...it went to 83 and bounced back
look at tck.b for a short term short sell
its had a big run too
do a pairs trade...go long on imn and short tck.b
Haha Christian, I forgot to buy FM at the low $80's. I bought it just now at 84.10 on a down day. Hopefully I can get another bounce and sell in the mid $85 range.
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