OMNI

[joet]

Kudos to those long on OMNI today..  I sold on the red doji two days ago, bummer, was playing a W pattern and thought that it had broken down...  Now with Melfs help i can calculate the target and see what is in play...  botoms at 6.63 and 6.75, middle leg top 8.47, conservative difference 1.72, thus target 10.19... agree?  Perhaps i will jumb back in if we get a small pull back...  Can the target be above where the left leg started?

On these what do folks use as stop limit?  A break of the middle high?  the bottoms of the W?? Trailing %?   I bailed on the slight down day because i was looking for the pattern to be smoother.  Any suggestions on how smooth or sharp the upside leg is to "Make" the pattern?
Do the middles often prove resistance?

Cheers Joe

[ScottishTrader]

OMNI breakout out of its recent trading range and it looks like its getting some volume coming in

Just brok 8.45-8.50 resistance.

[ScottishTrader]

Superb day for OMNI yesterday, but oh my, what a fickle beast!!! 

On Monday it seemed to get stuck at 8.68 and was just sitting there for ages - I had a "feeling" as the ask ticked down to 8.67 and entered a limit sell for 8.66, think it may pull back some, and then the flood gates opened!!!  needless to say my limit order didn't get filled, and before I knew it (had to deal with something else) it was sitting in the 8.20s, having given up the whole days gains.  5 minutes before close I thought is was looking very weak after that big drop, and in anticipation of a continuation move I sold, at market, right near the lows.  And guess what???  Right after the closing bell, big orders started coming in and it went right up to and past the highs of the day in the after market.

Needless to say, big gap open yesterday and then ran strong right out of the starting blocks, but without me   Didn't want to chase it as I was still smarting from my foolish sell, but boy does it look strong right now!

Anyways, should be happy with my gain but it still leaves a bitter taste in my mouth.  Next resistance is around 9.40-50, lets see how it holds up today.  Well on its way to that elusive WW target....

[ScottishTrader]

OMNI is looking even better...  Strong move today, topping out just above resistance at 9.84, but closed a penny under.  Looking for continuation tomorrow...

That WW target is looking quite attainable and we also have an inverse H&S formation with a truncated right shoulder - target of the inverse H&S is 9.84 + (9.84-6.63) = $13.05.

With strong earnings forecast, this could easily run to test old highs in the next few weeks...

[la-onda]

nice analysis & trade, applauds scottish Trader

[ScottishTrader]

OMNI wolfewave target MADE @ $10.30 this am.  Lets see what else its got....

[ScottishTrader]

OMNI reported (apparently without warning) in the middle of the day today  very unusual

http://biz.yahoo.com/prnews/061106/dam039.html?.v=85

They earned .26/share on revs of $26.6M, as they say nearly 3 times their 3Q 05 revs.  This appear however to be a slight miss to expectations and they got absolutely creamed on this release, having gapped up to 9.88, they lost over a dollar in fairly quick succession.  I'm not totally sure why, possibly because the earning annnouncement surprised people, was not pre-announced and there was no conference call or update from management beyond this.  Also a lack of future guidance.

In any case, investors didn't like what they saw, however I smell the potential of a bargain, despite the fact OMNI was trading as low as $7 recently.  Support at 8.80 held and I picked some up at 8.86.  I'm looking for this to hold and some chopping around the 9.00 range, but if 8.80 fails, next support comes in at 8.45-8.47, at the bottom of the gap.  My stop is set for 8.42

All in all not a pretty candle on the chart - this may end up being a quick trade my aim is to get out around 9.80, but I may settle for anything close to 9.50 if we get a short lived bounce.

[ScottishTrader]

Very nice rebound for OMNI on Tuesday, but I didn't follow my trading plan (not doing very well on my new trading philosophy yet  )  Tuesday's high was 9.78, 2 cents below my stated target of 9.80 for a quick swing, and would have been a nice 1 day trade.  I failed to set a limit sell, and so am now managing my plan as it develops.

OMNI made a long legged doji today, and looked strong in the afternoon, breaking above 9.50, but pulled back late in the day, closing just below the opening price.  Overall, I think OMNI continues to look positive, although it may need to consolidate some more in this range.  The chart suggests a potential symmetric triangle in the works (although I will admit t is pretty rough), as well as the developing right shoulder of an inverse head & shoulders.  Resistance looks to be at 9.62 and 9.80, and the price should find some support at 9.30 and 9.07.  I am maintaining a hold with a stop at 8.68, just below the low of the last month (risk of about 2% on my position).

[ScottishTrader]

I will also post this up here just now, as it gives a longer term flavour for OMNI.  The 1 yr chart shows just what an incredible year OMNI has had (actually looks not dissimilar to GIGM), and I think it is set to continue, with further expansion and as they add subsidiaries like Rig Tools into their revenue base.

It should be noted that OMNI could pull back to its ascending trendline around $8 and still remain bullish.  I hope it doesn't and that it breaks up through the $9 area to re-test its summer highs.  This looks to me to be a clear medium term hold.

[ScottishTrader]

Another down day for OMNI, but holding within my current trading plan.  As I study the chart, it looks more and more to me like OMNI is forming the right shoulder of a bullish inverse H&S (in pink on the chart, with the neckline currently coming in (a long way off) around 10.50. Obviously there is some short term chart development that needs to occur before we know whether this pattern will come to fruition.

Short term there is also a potential bearish H&S formation (in green) fractalled within the right shoulder, that is fully contained within a bullish falling wedge (in blue).  Doube horizontal support comes in at 8.78-80 (the low of the big red candle) and 8.67-68 (the tails of the early Oct gap).  This is a tricky one to call.  I am happy with my 8.86 entry, and want to see through the resolution of this pattern, but I also don't want to see a profit turn into a loss.  My current stop is set at 8.74, but I may pull that back to 8.66, as my risk is still low, and that puts it just under this double support.

Lets see how OMNI ends the week.

[Melf Elf]

Scotsman,

I'm very impressed, not only with your analysis and your hard work, but with your dedication and determination to become a successful trader.

BIG applause, buddy!

Pattern Review:

1. The Double Top target of 6.54 MADE, within nine cents.  Those situations are tough, which is why I say, "Don't step over dollars to pick up dimes."  Don't hold out for every last penny. 

The Double Bottom at 6.63 and 6.75 near the 200DMA was a strong clue to cover a short postion.  Those two lows also were a Wave 5 DOUBLE fakeout in your Wolfe Wave (nice job, seeing that!).

2. Bear Flag rally back to 9.39 broken support.

We should ADD to the short position on the break of the Bear Flag.  Funny how we'll "Double Down On A Loser," but seldom "Double Down On A Winner."  That break of the Bear Flag at 8.86 is the perfect place to do it.  The Bear Flag targets of 8.10 and 7.12 both MADE.

3. October 9 was an upside takeout of a W-Bottom.  Target: 10.19-10.31 IN PLAY, depending which leg you use to measure. 

In this case, OMNI broke out of an Inverse H&S on October 25, and the next day, your Wolfe Wave Target line came in at 10.33, so it would have been very reasonable to go with the 10.31 W-Bottom target, and sell into 10.31-10.33.  Both targets MADE.  The high was 10.50

Next post, we'll look at more of a close-up of the recent action.

[Melf Elf]

Short term there is also a potential bearish H&S formation (in green) fractalled within the right shoulder, that is fully contained within a bullish falling wedge (in blue). 

Scotsman,

In my view, patterns should begin at a high, or at a low, not in the middle of some other move.  Even when patterns are "nested" (patterns within patterns), there should be distinct starting points, at a high, or at a low.

In this specific case, where is the Falling Wedge "falling from?"  Has OMNI fallen from Blue #1, where you started your pattern, or has OMNI fallen from the high of 10.50, at Blue #2?

I'm by no means the final word on how to draw patterns, you understand, but I don't think that one is valid.  Just my opinion, of course.  I'd get rid of it.

[Melf Elf]

Scotsman,

In my view, a Bullish Falling Wedge would start at the 10.50 high (Blue#1), then come down and end, ideally, at 8.61, which is the 50DMA, or at/right near 8.47 (Blue #4), which was the W-Bottom pivot, then breakout.

That would look very bullish. 

It would tell us, "Okay, I had a false breakout above the neckline of the Bullish Inverse H&S pattern.  I also got rejected on a second attempt to breakout above that neckline, at the release of earnings.   But, I've found support at a key level, and I'm breaking out to the upsdie again on a Bullish Falling Wedge."

Something like that.

[Melf Elf]

iit looks more and more to me like OMNI is forming the right shoulder of a bullish inverse H&S (in pink on the chart, with the neckline currently coming in (a long way off) around 10.50.

Scotsman,

I'd say that's an extremely "optimistic" interpretation on an Inverse H&S.  You're long, though, so I certainly can't blame you.    

Two big problems with that interpretation.  The November 6 candle:

1. Voilume in a Right Shoulder should be the least volume in the pattern.  It's BIG.

2. It's a "Gap To Crap" reversal candle off the neckline of the larger Bullish Inverse H&S.

Pretty serious flaws.  It also looks more like a H&S Top than it does an Inverse H&S Bottom.

I'd throw that one out, too.  Sorry.   

I need to sign off now, but I promise to finish my comments before Monday's open, FWIW.

[ScottishTrader]

Hey Melf,

No problem and thanks very much for your input - often it is difficult to read charts with a truly objective eye, especially when you "want" it to do something (hence I asked for your impartial opinion).  I'm gonna have another look at this one too.

I think that 8.78-8.80 looked to be key support off the big down candle, so in the first instance I would like to see that hold, but I am getting less and less sure as to whenther the chart looks short term bullish or bearish.  If this level fails, it would probably be better to get out and wait for it to test either 8.47 support, or even that long term ascending trendline around 8 (if it goes down that far).  Maybe I just need to get away from some of these stocks that I "like" (i.e. am a bit too involved with), as while familiarity with a stock can be a good thing, it can really do your head in too!!  Basically, every trade needs to be treated like you are new to a stock.  No history 

Anyway, Thanks again for your analysis, and have a good weekend!

ST