3SOF

update AERTA:

AERTA is trading near the highest levels of its run.  The stock may be poised for a strong move higher from these levels as volume has remained strong.

We continue to trade this position the same in both the 3SOF and 3SOV portfolios.

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Position: bought AERTA @ 2.77 on 05/19/2006
Order: Hold
Exit: stop @ 2.58
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Quote from: Melf Elf on May 31, 2006, 05:39:32 AM
AERTA never tested 2,54-2.56 support, but rather, in a horrible market yesterday, alllmost MADE the 3.20 Symmetical Triangle target that is IN PLAY

The 3.20 Symmetrical Triangle target MADE just after the open.  Nice pick, G.  Applause.

TECHNICAL MERIT...10...10...10...10...10...10...

AERTA is running higher on the Rectangle breakout above 3.14-3.15.  Volume already is 3 times 100-day average in the first 45 minutes of trading. 

The Rectangle breakout puts Target: 3.48 IN PLAY.

Quote from: Melf Elf on June 12, 2006, 10:17:59 AM
The Rectangle breakout puts Target: 3.48 IN PLAY.

Rectangle Target: 3.48 MADE.

That's two scores for the bulls in just over an hour of trading this morning, on 4 times average 100 day volume.


TECHNICAL MERIT...10...10...10...10...10...10...

After breaking out above 3.14-3.15 resistance and rallying to 3.55, AERTA came back and tested the breakout.  Tuesday's and Wednesday's lows were 3.15 and 3.16.  "Former resistance should be support."  It was.

Today, AERTA has broken out above Monday's high of 3.55, and also has taken out the January, 2000 high of 2.56, so it's at multi-year highs, currently at BID 3.57...ASK 3.60.   



TECHNICAL MERIT...10...10...10...10...10...10...

Thx for the great technical updates Melf 

update AERTA:

AERTA continues to demonstrate strong volume on this run so we feel very good about this stock.  This high volume up in the pattern allows the weak big hands to step out and release selling pressure... meanwhile the big volume attracts new investors and traders.

Price seems to be traveling in a channel and there also seems to be support @ 3.15 and ~3.00.  For the 3SOF portfolio we will raise our stop.  For the 3SOV portfolio we will give AERTA a bit more room to play out its value and maintain our stop in the same position.

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Position: bought AERTA @ 2.77 on 05/19/2006
Order: Hold
Exit: stop @ 2.91
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update AERTA:

AERTA continues to demonstrate strong volume on this run so we feel very good about this stock.  This high volume up in the pattern allows the weak big hands to step out and release selling pressure... meanwhile the big volume attracts new investors and traders.

Price seems to be traveling in a channel and there also seems to be support @ 3.15 and ~3.00.  For the 3SOF portfolio we will raise our stop.  For the 3SOV portfolio we will give AERTA a bit more room to play out its value and maintain our stop in the same position.

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Position: bought AERTA @ 2.77 on 05/19/2006
Order: Hold
Exit: stop @ 2.58
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Quote from: eliteG on June 16, 2006, 03:09:06 AM
Price seems to be traveling in a channel and there also seems to be support @ 3.15 and ~3.00.  For the 3SOF portfolio we will raise our stop.  For the 3SOV portfolio we will give AERTA a bit more room to play out its value and maintain our stop in the same position.

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Position: bought AERTA @ 2.77 on 05/19/2006
Order: Hold
Exit: stop @ 2.91
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G.,

Nice going on this stock, and I applaud the idea of having different strategies for the different porfolios.

Yes, 3.14-3.15 has been very good support, and the up trendline off the mid-May low comes in right at the 3.00 that you mentioned.

Some weekend T2T, for an exit strategy:

1. We had two upside targets that were MADE: 3.20 and 3.48, the average of which is 3.34, for about a 20% gain on the trade if ½ the position were sold at each target.  I like to "take profits when targets get MADE."  Or, at least "some" profits.

If AERTA opens near Friday's close of 3.31, selling a reasonable open would lock in that gain.

2. Since 3.14-3.15 was resistance and then became good support, I'm thinking that if 3.13 gets printed, the 3.00 trendline will get tested, and possibly broken since it will be the first technical misstep in AERTA in a long, long time.  Technically, it's been a perfect 10, in my opinion.

A print of 3.13 might be another consideration for a sell, to lock in profits.

3. A break of that up trendline (near 3.00 now) would be a second technical misstep, which could bring in more selling, AND a stop out AT 2.91, for a 5% gain.  A gain is a gain, but with a paper gain now near that 20%, I'm thinking that the trade could do better than that.

MACD histogram has given a DOUBLE negative divergence on the last move to a new high at 3.71.

The first negative divergence resulted in the MACD itself kicking higher off its signal line, and moving higher with the stock, confirming the new high.  Good illustration that a negative divergence doesn't necessarily mean "sell."

But, now that we've got a DOUBLE negative divergence, "if" AERTA takes out the strong 3.14.3.15 support, MACD likely will go below its signal line (it's already rolling over to the downside).

Again, that doesn't "necessarily" mean a sell in a stock that is in a strong uptrend like AERTA is, but personally, if 3.13 got printed, I'd be inclined to bank the 13% profit.

Just my opinion, and some "T2T."  You're doing a GREAT job, G., in very, very difficult market, and I greatly admire you, Frederick and Michael for not letting it get you down, and for continuing your efforts at 3SOF. 

Thank you.

Quote from: Melf Elf on June 18, 2006, 04:31:52 PM
MACD histogram has given a DOUBLE negative divergence on the last move to a new high at 3.71.

The first negative divergence resulted in the MACD itself kicking higher off its signal line, and moving higher with the stock, confirming the new high. Good illustration that a negative divergence doesn't necessarily mean "sell."

But, now that we've got a DOUBLE negative divergence, "if" AERTA takes out the strong 3.14.3.15 support, MACD likely will go below its signal line (it's already rolling over to the downside).

I don't want to put to fine a point on that DOUBLE negative divergence in AERTA's MACD histogram, but at the same time, I'd rather illustrate my point now rather than after the fact, if the stock gets into technical difficulty.

AERTA is positioned similarly to HOM when it topped out on the DOUBLE negative divergence in its MACD histogram.  Like AERTA, HOM went to a new high off the first negative divergence, but on the DOUBLE negative divergence, HOM moved down on a Bearish Evening Star, on May 24.

May 25, HOM closed at 11.45, and MACD crossed below its signal line, which "can be" a sell signal.  That isn't ALWAYS a sell.  As technicians, we have to decide whether or not we want to take the signal. 

"After a big run-up in the stock, do you want to sell the DOUBLE negative divergence in the MACD histogram, and the MACD itself, crossing below its signal line?"

May 26, HOM closed at 11.09, below near=term horizonal at 11.25, and also closed below the Kijun-Sen and the Tenkan-Sen (solid green and red lines).

"Do you want to sell the DOUBLE negative divergence in the MACD histogram, the break in MACD below its signal line, the break below 11.25 horizontal support, and the break below the Kijun-Sen and the Tenkan-Sen?"

As far as we know, AERTA looks fine fundamentally, but to my knowledge, so did HOM when it topped out at 14.14.

Who knew that it would crash 66%, 8 days later?    

I have no reason to suspect anything that dire for AERTA, but we also can't possibly know those things in advance.  We get the negatives that HOM was telegraphing, technically, then we find out the news later on.

Bottom line:

"We've got a DOUBLE negative divergence in AERTA's MACD histogram.  If the MACD turns down below its signal line, and if 3.14-3.15 support gets broken, do you want to sell?"

"If all of that happens, and if the up trendline off the April 28 low gets broken today at 3.00 (that trendline rises at 0.029 per day), do you want to sell?"

Forgive the comparison to HOM, a crashed stock.  Again, I certainly don't have any reason to suspect that kind of action in AERTA.  Yeeks.  It's still acting great. 



;DTECHNICAL MERIT...10...10...10...10...10...10

Last week's candle was a Bearish Inverted Hangman.  The "wick" was a little more than double the "real body" (that's the white part of the candle, representing the open and close).

The low of the Bearish Inverted Hangman is 3.15, which has been strong support (3.14-3.15, actually).  To be bearish, that candlestick needs downside confirmation, so again, a print of 3.13 would be at least the beginings of that confirmation, especially a close below 3.14-3.15 with attendant MACD going below its signal line.

Sorry if I sound down on AERTA.  The opposite.  It's been a stellar performer in a horrilble market.  Just trying to anticipate if there's gong to be a problem, before it becomes one.

Quote from: Melf Elf on June 19, 2006, 04:50:40 AM
Last week's candle was a Bearish Inverted Hangman.

In the daily chart, the last four candles have been a Bearish Dark Cloud Cover and 3 Bearish Doji Star Hangmen.

Quote from: Melf Elf on June 19, 2006, 04:27:14 AM
MACD histogram has given a DOUBLE negative divergence on the last move to a new high at 3.71.

Yesterday, MACD crossed below its signal line, by just a hair, on the heels of the DOUBLE negative divergence in the histogram, so that's an alert.

We're getting warnings of possible selloff in both the daily and weekly candles, and in the technicals.  A print of 3.20, a penny below yesteday's low, would be another indication that 3.14-3.15 support is going to be tested again, and possibly broken this time.

Next support would be the up trendline (red) off the April 28 low, which comes in today at 3.058.

MACD

Hey Melf.. thx for the charting and opinions(great TA!  ).. I agree that AERTA may slow down and consolidate now... and so..

update AERTA:

AERTA has been a great mover for us on both the 3SOF and 3SOV portfolios.  We think there may be a good oportunity to sell the stock at a nice level tomorrow since the market seems to be in a bull mode and may give us a great opening(perhaps even more  ) 

We are only selling AERTA on the 3SOF portfolio and will maintain the position in 3SOV for now.  AERTA is being sold from 3SOF portfolio because it has risen a lot and may be hinting at some weakness.  We need to protect this profit and hopefully will have an opportunity to jump in again. 

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Position: bought AERTA @ 2.77 on 05/19/2006
Order: Sell AERTA on Thursday 06/22
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G.,

Congratulations on the nice trade! 

As you know, negative divergences in strong stocks like AERTA can go on for a awhile, with the stock going higher.  In this case, if that happens, you've still got it in the 3SOV portfolio. 

Meanwhile, with the stock showing some technical weakness, you've banked a very nice gain here.  Good going.  Applause!   

More signs of technical weakness:

1. Friday's candlestick is another Bearish Dark Cloud Cover (the close was half way, or more, into Thursday's white candlestick.

2. MACD (Daily) failed from below its signal line, so far, and has ticked down (next post).

3. The weekly candle is a Bearish Doji Star (needs downside confirmation).

For learning purposes, at Thursday's close, when we saw the MACD struggling with the back-test of its signal line (see MACD chart in my last post), Thursday's low of 3.40 can be used as a "sell pivot," meaning that a print of 3.39 is a sell, or sell short.

Here's why: Thursday's open was 3.40.  The close was 3.50.  We know that the technicals are weak.  If 3.40 were to be taken out to the downside on Friday (it was), that suggests further weakness, specifically that MACD likely will tick down from the re-test of its signal line (it did). 

That's just one indictor, of course, but it's a piece of evidence, and it's a "failure" signal.

Friday's open was 3.59.  AERTA rallied to 3.66, near the recent high of 3.71.  When we see the stock:

a. come back to the 3.59 open, then print 3.58...
b. come back to Thurday's 3.50 close, then print 3.49, thereby going into the red on the day...

...that's a pretty good indication that the stock is confirming the weakness that's we've been seeing recently, and that Thursday's 3.40 likely will be taken out on Friday, or early next week. 

It was taken out on Friday. 

Friday's low was 3.32, triggering the "sell pivot" on the print of 3.39, a penny below Thursday's 3.40 low.  Friday's close was 3.42.

Most brokers won't allow a short in a stock below $5.00, but if they did, shorting just about anywhere on Friday's weak rally to 3.66...at the print of 3.58, a penny below the open...or, at the print of 3.49, when AERTA went into the red on the day...or, at the 3.39 "sell pivot" is a real decent play as a sell,  as a short, hedging* against a long-term position in the stock, or as an outright short.

(*You continue to hold the stock long-term, but you protect your position by benefiting from any downside, short-term). 

Remember that this is just an example of what technical indications we would look for to sell any stock, or to sell it short.  In other words, "How much evidence do I have, that this might be a good place to exit?" 

AERTA certainly could go up next week,  and knock out the 3.71 high, but there's a good bit of evidence that progress to the upside might be difficult right now, and that there's a good chance 3.145-3.15 DOUBLE support will be tested, and possibly broken.

The up trendline off the late April low comes in on Monday, June 26, at 3.145.  That's where we had the all of those 3.14-3.15 prints, at the top of the Rectangle in late May and early June, so that's DOUBLE support.