3SOF

Melf, great call yesterday, thanks again for all your time and efforts on this one. I placed a stop on all 20k shares at $1.29 this morning, only to see it tank. Looking to get back in (thinking some CES news might show up),  so I await your post in the A.M with your thoughts..............you the man.

Quote from: Melf Elf on January 09, 2007, 07:13:28 AM
Very nice entry (and exit), bocasva!

Your entry was a couple of pennies above the channel (green) validation on December 27, and your exit was a few cents from the 1.35 channel (blue) target that MADE.  Nice!

Thanks Melf. I'm always looking forward to your objective TA, applaud.

Today's candle is ugly to say the least. Unless we hear from ONT shortly, it surely will head lower.

I've noticed the MM for ONT has a tendency to open trading 4 to 6 minutes after the regular market open, so I would recommend caution and using a limit order for anyone closing or opening a position around market open.

I sure will be watching it and see if I'm allowed a second round.

Quote from: Melf Elf on January 09, 2007, 04:49:14 PM
I'm out of bullets for the day and ready to sign off, but I'll post some thoughts on this chart to you early tomorrow morning, well ahead of the open.

Stockster,

Geez, I really was out of bullets...I posted you the wrong chart! 

Sorry about that. 

Before I post the hourly chart that I intended, let's see what we've got in the daily chart:

Quote
ONT looks committed to go even more parabolic than it already has (the slope of the green channel is much steeper than the slope of the blue one) so if a Bearish Evening Star shows up at the top of this channel (green), that could cause the momo boys to get weak-kneed, and could bring in enough selling to eventually break below the channel (green)

We got a Bearish Engulfing Candle that engulfed the prior five day's closes, which looks kind of...um-m...

Quote from: bocasva on January 09, 2007, 11:08:56 PM

Today's candle is ugly to say the least.

Well, I was going to try to be tactful, but we'll go with your ugly, bocasva. 

Quote
Unless we hear from ONT shortly, it surely will head lower.

Closing near the low of the day on heavy volume (the heaviest volume since the breakout, by just a little) certainly gives the suggestion of a test of the bottom of the channel.

Quote
For today, January 9, the bottom of the channel comes in at 1.12994, so a print of 1.12 would be a technical break of that support.

For today, January 10, the bottom of the channel comes in at 1.14565, so a print of 1.14 would be a technical break of that support.

Sometimes, you get a slight penetration of a trendline, then the stock rallies nicely, and its alright.

At other times, you get a little more than a slight penetration, causing some selling, but it turns out to be a "shakeout," or a Bear Trap (trapping players into thinking that it's bearish, when it really isn't bearish), then the stock rallies.

How much trendline penetration is "too much?"

That's not always easy to say, but look back at yesterday, when the channel broke at about 1.32 in the hourly chart.  The initial break took ONT down to about 1.26 early in the session, when I posted:

Quote from: Melf Elf on January 09, 2007, 09:59:31 AM
Down 8% in the early going.

Basis the hourly chart, the channel off the December 27 low of $0.99 has been broken to the downside, and ONT has rallied a little to re-test it.

ONT currently is BID 1.30...ASK 1.31

That re-test of the broken channel  failed, then the early morning low of 1.26 was taken down.  That breakdown...failed re-test...break to a new low...was a very good indication that ONT was in for a lousy day.

In this daily chart, we know that the bottom of the channel was validated at Green #3, meaning that the market told us, "Yes, that's definitely support.  I nailed that trendline exactly, then rallied 10% into the 1.09 close ."  That was nice information from the market.

The technical players know where that trendline is, and they'll be watching it.

Quote from: stockster on January 09, 2007, 04:04:03 PM
How low do you think it will go tomorrow if it breaks down through the lower channel boundary line in the a.m., as it's looking like it might?

We can't know that, of course.  We'd all be guessing, which wouldn't do us any good.

What we can know, however, is what we're going to do about any channel break.

That's the important thing.  Where would we throw in, and sell?  Why?

Would it be a print of 1.14, a technical break of the channel in the daily chart?

1.13, to give it a little room?

1.12?

Try to make that decision outside of market hours, so that we aren't playing our panicked emotions.

se7en and boatguy, for example, have nice entries well below here, and if they decide, "I'm selling 1.13," which is a clear violation of the 1.14565 trendline, basis the daily chart, that's a very sound decision, and they'll have a nice gain in the trade.

Don't get caught up in "being right."  If they should sell, and ONT bounces after that, they still have a nice gain, and none of us knows ahead of time what any stock is going to do.

We only can know what we're going to do about it , and we're never injured banking a profit.

Quote from: boatguy on January 09, 2007, 04:15:46 PM
Tough day today

I'm still in too- not going to take a loss but will hold for now.

That's what I mean, boatguy.  You know how you're going to handle the trade.  You'll come out of it with a gain, and not sit there watching it tank on you.

If there's no break of support, you'll hold it.  Very good.

Sorry that this post is so long, but it's good to go through these mechanics, not just for this ONT trade, but for playing the market, in general.

Next post, we'll look at the Hourly Chart that I intended to post to Stockster after yesterday's close.

Before we do, notice the red horizontal trendline, at 1.10-1.11.  We'll look at it more closely in the hourly chart.

Quote from: Melf Elf on January 10, 2007, 05:48:12 AM
How much trendline penetration is "too much?"

Basis the daily chart, I'd have a hard time defending being long ONT on a break of the bottom of the channel, which will be a print of 1.14 today.  I'd probably allow for a print of 1.13, in case it's a shakeout, but I'd probably be gone at 1.12 unless I had some other technical reason to stay.

Basis the Hourly Chart, I can defend holding through 1.10 for TWO reasons:

1. That's about where the trendline off the December 11 bottom of the channel comes in today in the Hourly Chart (it's at 1.14565 in the Daily Chart).

2. There was a gap up from 1.10 on December 28, the day after the bottom of the channel got validated (Green #3 on the Daily Chart) on December 27.

That gap got filled at 1.11 the next session, then ONT shot higher, to the top of the channel.

Rising Channels/Bear Flags often "morph" (or, change) into Bearish H&S Tops.

If that's going to be the case with ONT, I've drawn what it would look like.  The 1.11 gap fill on December 29 would be Data Point #1 of the neckline, and we'll make Data Point #2 here, at 1.10...1.11.  Maybe 1.09.  I wouldn't allow for much more on the downside than 1.09.

If that pattern should form, the high of the Left Shoulder is 1.26, so ONT "shouldn't" rally any higher than that, then "should" break below 1.10-1.11.

All of that, obviously, is really getting ahead of ourselves, and speculating, but I'm trying to think of any reason that I could justify holding a break of the channel, basis the daily chart, at 1.14 for today.

I could justify holding through 1.10, for that reason.  I've seen that pattern form a number of times, looking ver-ry bearish, then the stock turns higher, and rallies to new highs.

It ends up being ver-ry bullish.

Tough decision for you guys, but I hope some of this helped.  The easiest thing would be for ONT to hold the channel, and RALLY.  I hope it does.

Good luck, everyone! 

Quote from: Holygrale on January 09, 2007, 09:47:00 PM
Melf, great call yesterday, thanks again for all your time and efforts on this one. I placed a stop on all 20k shares at $1.29 this morning, only to see it tank.

Holygrale,

My pleasure.  I certainly owed you one for the AUY trade. 

Glad that you had a gain in this one!

Thanks Melf,

As always your TA skills are very appreciated!!

Applaud

Thanks a lot for your views Melf!

One thing I note, if history is any guide (and it often is with ONT), that last year on the first day of the CES, ONT hit a high of $1.48 (this year $1.43, Monday) before turning around.  Then on the second day there was still no news and ONT had an intraday low of $1.18 (this year $1.16, yesterday).

On the third day of the CES (today), last year ONT reached a low of $1.05 before truly bouncing.  So in sum last year it fell a total of .43 before any good tradeable move.  We'll see what happens today (an equivalent amount would put it close to $1.00), but I suspect if there is still no news from the show (same as last year), there could be more heavy selling.

Quote from: Melf Elf on January 10, 2007, 05:48:12 AM
For today, January 10, the bottom of the channel comes in at 1.14565, so a print of 1.14 would be a technical break of that support.

They opened it at 1.15.

Quote
Before we do, notice the red horizontal trendline, at 1.10-1.11.  We'll look at it more closely in the hourly chart.

Then took it right down to 1.10 - 1.11.

QuoteFor today, January 10, the bottom of the channel comes in at 1.14565, so a print of 1.14 would be a technical break of that support.

It's now back to BID 1.14...ASK 1.15, re-testing the broken channel, basis the daily chart.

I wouldn't like to see 1.10 get taken down. 

boatguy and Stockpicker,

Thanks for your comments. 






[/quote]

Quote from: Melf Elf on January 10, 2007, 05:48:12 AM
The technical players know where that trendline is, and they'll be watching it.

A lot of trading at key 1.14...1.15.  Players are trying to decide how seriously to take the channel break, below today's 1.14565.

They just decided to jam it back into the channel, to 1.20.  We "could" form a Right Shoulder now, below 1.26, the high of the Left Shoulder.

If 1.10 gets taken down now, that wouldn't look good.

A  sustained move above 1.26 would be nice.

I've left off the steeper channel, and yesterday's break of that channel, for easier viewing.

We can see that this morning's spike low to our 1.10 accompished TWO things:

1. It showed us support at the up trendline (white), which is very good.

2. It also showed us that the Rising Channel possibly has "morphed" (changed) into a Bearish H&S Top, with the neckline at 1.11 and 1.10.  That wouldn't be good.

So far, all we've accomplished on the spike to 1.20 is to fill the gap from yesterday's 1.20.

If we don't do anything more than that, and stall around under 1.20, or even rally below 1.26 (the high of the Right Shoulder), then break below 1.10, that would complete the H&S Top, and a target of $0.79 IN PLAY.

Math:

1.43 - High of the Head

1.11 - The more conservative of the 1.11 - 1.10 neckline

1.43 - 1.11 = 0.32 = Target: $0.78 EDIT: Sorry, it's $0.79

That, essentially, would be a Parabolic Return of the recent Parabolic Rally, like XNN had yesterday.

That doesn't mean that we'll necessarily get to $0.79, but you see why I would take a break of that support seriously.

Personally, I'd sell a print of 1.09.  I'd also sell a CLOSE below the 1.14565 channel.  If it's too close to call at the close, okay, I'd give it a chance over night.

If it's 1.13...1.12...I'd sell.

That doesn't mean I'm "right."  I don't worry about being "right."  I play it the best I can, and I sell clear breaks of support.

Each of you will make you own decision, of course.

By the way, this situation is why it was a good idea to take "some' profit when the 1.35 got MADE.  It takes the pressure off here, and you can let the remainder of the position run, if support holds.  Give that some thought for the future.

Interestingly, we're currently BID 1.14...ASK 1.15, right at either side of support again!

Good luck, everyone!

Thanks Melf-

My hidden stop came within a penny of triggering, glad I wasn't watching the open.

News would be nice but I would be surprised to see it on the last day of CES.

Still holding barely, will let this one go if it drops again-

Great analysis Melf, like always! 

<applaud>

Stopped out-

Boatguy, where did you get stopped out?  This thing is all over the place... 

What was that enormous "snap" downdraft to $1.02?  Is that what took you out?  It looked like it might have been a dumped block that jumped past bids...

I'm just wondering if Melf thinks the technicals are irreparably damaged now   because of that print of $1.02? I just bought this morn for 1.14 and didn't get stopped out, but can still get out with little damage. How bout it Melf? THNX.

Quote from: stockster on January 10, 2007, 01:47:46 PM
What was that enormous "snap" downdraft to $1.02? 

Stockster,

I wasn't watching the Time & Sales, so I don't know if it was one big trade at 1.02, or if there were several trades at 1.02, and also at other prices between 1.10 and 1.02.

The volume on that 1-Minute bar was 203,100. 

That 1-Minute bar at 1:10PM was:

Open:  1.13
High: 1.13
Low: 1.02
Close 1.11

Because of the immediate snapback to a close of that 1-Minute Bar at 1.11, I'm thinking that it's either a bad tick (meaning that it never traded there), or that someone put in a market order on the entire 203,100 shares and got spanked on the horrible fill of 1.02.

If the latter is the case, the guy should scream bloody murder to his broker.  4.5 million shares have traded, so I can't see giving the guy a  fill like that.

Quote from: BigSully1 on January 10, 2007, 01:57:11 PM
I'm just wondering if Melf thinks the technicals are irreparably damaged now   because of that print of $1.02? I just bought this morn for 1.14 and didn't get stopped out, but can still get out with little damage. How bout it Melf? THNX.

Big Sully,

No, I don't consider the technicals to be irreparably damaged.  Our steeper-sloping channel (in green) clearly has been broken on an intraday basis, so that's been damaged, but since there are no other trades below 1.10, other than the aberrant 1.02, I'd go ahead and play it as you planned.

If the 1.02 stands, and is shown when we download the daily chart tonight, we'll have a Bullish Hammer with a long-g-g tail (down to 1.02) that would look alright if ONT can close at 1.15, or better.  That would keep the close inside our channel.

You guys have a tough call on a close of 1.14, or lower because, while it's still going to look like a Bullish Hammer with a long-g-g tail, and it would be a close below the channel.

In that case, is our H&S Top with the neckline at 1.11-1.10 going to play out, with a possible Bullish resolution if 1.43 gets taken out later on, or ONT going to get smacked for breaking the channel today, at 1.14?

   

You got in at 1.14, so again, I'd go ahead and play it out as you planned, and let the market tell you.

Nothing below 1.10 has been printed on any other 1-Minute bar, so if I saw 1.09, I'd get outta there.  Just my opinion, of course.

Quote from: boatguy on January 10, 2007, 01:20:05 PM
Stopped out-

If you got a fill below at 1.02, boatguy, you might consider calling your broker and asking him to review the Time & Sales at 1.10PM this afternoon.

Unless you're the guy who had the 203,100 shares, they should give you a better fill.