KOMG

[Melf Elf]

KOMG is struggling today, trying to put in a Right Shoulder of a little Bullish Inverse H&S pattern (pattern in green) after suffering a quadruple failure (four days in a row) at the neckline of the BIG H&S Top, and at the Top of the Declining Channel off the February high.

The low of the Left Shoulder on April 24 is 41.63; today's low of the "possible" Right Shoulder is 41.68, which is a little bit higher, as it should be.

Off the 54.98 high, KOMG probably has at least as many Bear Moves at it had last year, when we identified "9 Bear Moves" in this stock in this folder, prior to the KOMG bottoming.

If you weigh the  width of this "possible" Bullish Inverse H&S Pattern against the width of the H&S Top, it doesn't look nearly good enough for a breakout, but a breakout would occur, nonetheless, on a takeout of the neckline: 45.09-45.17.  That also would be a channel breakout.

45.09 was the high on release of earnings, the response to which was a failure near the neckline of the H&S Top, resulting in "sell the news."

If KOMG can take out 45.09-45.17, next resistance is the declining 50DMA and the Right Shoulder of the H&S Top, at 47.17-47.76.

In the interim, the chart is bearish as long as KOMG trades below the neckline of the H&S Top (blue line), currently at about 44.55. The downside targets on the chart are IN PLAY.

KOMG has rallied off the 41.68 low and currently is BID 42.19...ASK 42.20, down $0.79.

[Melf Elf]

KOMG is struggling today, trying to put in a Right Shoulder of a little Bullish Inverse H&S pattern (pattern in green) after suffering a quadruple failure (four days in a row) at the neckline of the BIG H&S Top, and at the Top of the Declining Channel off the February high.

The low of the Left Shoulder on April 24 is 41.63; today's low of the "possible" Right Shoulder is 41.68, which is a little bit higher, as it should be.

The Bullish Inverse H&S possibility was negated in the final hour yesterday.

KOMG has rallied off the 41.68 low and currently is BID 42.19...ASK 42.20, down $0.79.

The rally didn't hold up.  41.68 was taken down on some volume, following through to the downside after the quadruple failure at the neckline of the H&S Top, and at the top of the Down-sloping Channel.

Next support is just below here, at 40.81, then the 200DMA, at 38.78.

[Melf Elf]

Ichimoku Kinko Hyo Chart:

[Melf Elf]

Next support is just below here, at 40.81,

KOMG went down to 40.80 right from the open, held, then rallied against the serious tanking in the general market.  It couldn't hold onto the better portion of its gain on the day, but that's at least a moral victory under such lousy circumstances.

A weak "possible" double-bottom at 40.80 - 40.81 now is in place for a rally that needs to take out key resistance at 45.17.  It's "weak" because it's only a three-week pattern, going up against a four-month H&S Top (pattern in blue).

The first sign that KOMG has a chance of taking out 45.17 would be a rally above the top of the down-sloping channel (pattern in red), which comes in on Monday at about 43.75.  KOMG wouldn't be "out of the woods" just yet if it can do that (it has to take out 45.17), but that would be a good sign that it's got a chance of doing that.

The QQQQ is at key 40.16-40.19 support.  It closed at 40.19 exactly. (see next post). 

While the QQQQ hasn't broken down yet on a closing basis, KOMG not only broke below a H&S Top three weeks ago, it already has re-tested that neckline, has tried to rally above the down-sloping channel, and has failed both tests.

KOMG is providing leadership on the downside.  It would be a big help if KOMG could hold key 40.80 - 40.81 support here, and spring a "Bear Trap," by taking out 45.71 to the upside.

For those unfamilar, a "Bear Trap" is set by having us thinking that something is bearish, when it actually is bullish.

In this case of KOMG, it would be having us (incorrectly) thinking that the breakdown of the H&S Top was bearish, then having it turn out to be bullish.

The way that the "Bear Trap" gets sprung in this case, is for KOMG to complete this "possible" W-bottom by going up and taking out 45.17, which is:

1. an upside breakout of the channel (in red)

2. the middle of the "W" bottom, so a bullish pattern breakout

3. back above the neckline (44.41 - 44.50) of the H&S top

Unless/until KOMG does that, the chart is bearish, and the downside targets on the chart are IN PLAY.

[Melf Elf]

The QQQQ is hanging onto key 40.16 - 40.19 support by a hair.  The close was 40.19.

See my post in the QQQQ folder on The World Market Indices Board, if interested in a more detailed analysis of the QQQQ.

[Melf Elf]

The way that the "Bear Trap" gets sprung in this case, is for KOMG to complete this "possible" W-bottom by going up and taking out 45.17, which is:

1. an upside breakout of the channel (in red)

2. the middle of the "W" bottom, so a bullish pattern breakout

3. back above the neckline (44.41 - 44.50) of the H&S top

Unless/until KOMG does that, the chart is bearish, and the downside targets on the chart are IN PLAY.

KOMG just printed above 45.17.  It's fallen back a bit, but that's one of the few bullish-looking things Ive seen all week. 



Interesting...while the QQQQ broke support and got smacked all week, KOMG has managed to rally back to broken support.

[la-onda]

KOMG: FTN Midwest Res Starts @ Neutral
Tuesday , May 30, 2006 12:12 ET
Issuer: Komag Inc (NasdaqNM: KOMG)
Analyst Firm:  FTN Midwest Research
Ratings Action: INITIATE
Current Rating: Neutral

and updated KOMG May presentation:
http://www.komag.com/investors/presentations/KOMG1Q06_May06.pdf

[Melf Elf]

Bought KOMG at 42.32.  Stop: 41.08, below this week's low.  Risk: a loss of 2.9%

KOMG just printed above 45.17.  It's fallen back a bit, but that's one of the few bullish-looking things Ive seen all week. 

KOMG has been showing good relative strength lately.  It rallied for six or seven days in a row in a down market, and in this week's down market until mid-week, KOMG held $2 above its low.  The technicals also are much improved.

[joet]

Melf,thanx for the great posts!

With my 1 minute look KOMG loks like a good short to me...  the 3 month trend is decidely down and with these small rallies it looks like a good short entry here in the 42's... MACD weekly still down...  I will be paper trading this one... still shorting SHFL from 32.65   BRCD is also a tempting short here at 6.10.. watching
cheers joe

[Melf Elf]

Melf,thanx for the great posts!

With my 1 minute look KOMG loks like a good short to me...  the 3 month trend is decidely down and with these small rallies it looks like a good short entry here in the 42's...

joe,

I agree with you.  KOMG has been a great short since the break of the Bearish Rising Wedge in late March, and again at the break of the H&S Top in late April at earnings.

I'm taking a walk on The Dark Side here, playing KOMG long, but I think it's worth the roughly 3% risk, in case we've made at least a short-term bottom here. 

Basis the daily chart, I like the fact that KOMG "walked down the the top of the channel" (red), then held support at its 200 DMA, and then rallied back to its 50 DMA.  I also like the fact that KOMG didn't trade at a new low this week, along with the rest of the NASDAQ.  Good relative strength.

The 13/21 RSI and daily MACD look much better, too.  I'll show you the latter next.

[Melf Elf]

KOMG - MACD (Daily)

[nutsterrt]

I've been watching this discussion from the shadows and have joined Melf on the long; purchased this AM, in at 42.25.

[Melf Elf]

Bought KOMG at 42.32.  Stop: 41.08, below this week's low.  Risk: a loss of 2.9%

Yesterday's low was 41.10, two pennies above my stop.  The close was 41.11, a penny above the low of the day, so I expect to get stopped out at the open.

Curses! 

I should have taken a break even on Monday, whien I didn't like the H&S Top in the NASDAQ Composite, but we always can "coulda...shoulda...woulda."  I didn't do it.

I "jumped the gun" on my entry into KOMG, which is why I'm only willing to risk 3%.  As joet correctly pointed out, the trend has been down, and I am playing against the trend, anticipating that KOMG would break out "if" we put in a capitulation low in market last week.  BTW, I forgot to applaud joet for that good observation, which I do now, belatedly.

We still might have put in that capitualation low in the market, and based on that, I can justify moving my stop down the recent 39.16 low for a risk of a loss of 7.5%, which isn't bad, but I'm not going to do that.

I knew that I was playing against the trend, anticipating a trend change, and I didn't get it.  If I'm stopped out for a 7.5% loss on a stop out below 39.16, I will end up saying to myself....

YOU KNEW YOU WERE PLAYING AGAINST THE TREND, MELF.  HELLO???

 

A 3% loss for doing that in a good stock like KOMG that looked promising, technically, is okay with me.  I was trying for a good entry before it broke out.  A 7.5% loss for doing that (jumping the gun) isn't okay with me.

I'll sell a print of 41.08 in KOMG for a 3% loss, even though I still like its chances of holding above 39.16, then breaking out.  Management decsion.

[joet]

Melf you are not stopped out yet  atn42.25 as i write, i am looking at is as a short entry in the trend down???  I will probably just trade this one on paper... always learning...  lower highs make me feel that the trend is not broken yet, I bet you are taking profit as i write!  The fast line on MACD is trying to hang on but..

AAPL is tightening up in the 57s wonder which way it will break?  market trend is bearish for AAPL, would you say that if it breaks below 57,  56.60 would be a good short entry or would you expect that to be the spark for a bull rally... hope to hear your thoughts on the AAPL thread.

cheers joe

[Melf Elf]

Melf you are not stopped out yet  atn42.25 as i write,

joe,

I dodged a bullet on that one so far...by TWO cents.  Whew! (we need a face on the toolbar that is sweating profusely).

i am looking at is as a short entry in the trend down???

That's the way to play stocks like KOMG, that have been in a downtrend.  Shorting the re-test of the broken 44.41-44.50 neckline at April 26 earnings was a great short.  Shorting any of the failures at the 50 DMA also was a good short.

Here's the problem shorting it now: KOMG hasn't given up much, it's been basing above its 200DMA for almost two months, and the LONG-TERM trend still is UP. 

I will probably just trade this one on paper... always learning...

That might not be a bad idea.  This two-month base could be good enough now to go up and successfully challenge the three-month H&S Top. 

Think of the daily chart (posted this morning) as The Bulls having 3 players on the field (each of the candlesticks above the 3-month H&S Top) vs The Bears having only 2 players on field (each of the candles below the 44.41-44.50 neckline.

Although that favors the Bears, we have to remember that the long-term trend is UP, which favors the Bulls, and that KOMG has good fundamentals, which also favors the Bulls.

lower highs make me feel that the trend is not broken yet

That's correct.  The short-to-intermediate term trend still is down.

I bet you are taking profit as i write! 

That's incorrect.     

I'm hanging in there (by a thread this morning  ), for the reasons that I bought it, initially.

The fast line on MACD is trying to hang on but..

I hear ya.  MACD is acting fine, but it's still below zero, and it could fail at or below zero if KOMG wimps out here, and doesn't go through the 50DMA and through the broken 44.41-44.50 neckline on this rally.

Yesterday's hold of 41.10 gives KOMG a chance at a "W"-bottom breakout.  The legs of the "W" are 41.09 and 41.10.  The midldle of the "W" is 43.95, so a print of 43.96 would put Target: 46.82 IN PLAY.

Math:

43.95 - 41.10 (the more conservative low) = 2.85 points
43.95 + 2.85 points = 46.80

AAPL is tightening up in the 57s wonder which way it will break?  market trend is bearish for AAPL, would you say that if it breaks below 57,  56.60 would be a good short entry or would you expect that to be the spark for a bull rally... hope to hear your thoughts on the AAPL thread.

I'm on the bearish side of neutral on AAPL.   57.67 broken support should have meant something, but it hasn't, so far.  APPL trades above and below it, willy nilly.  I'm leaving APPL alone for the moment.