BLM Analysis. Case study for this week.

CHARTY

Active member
119 1
I cannot post on themestream. Below is the full text.

The following text contains a technical analysis report on BLM. The main purpose of this text is educative, since it will be discussed, together with other similar texts, on the bulletin board of Cityinvestor, which you can fiind at www.sharkinvested.com.

The major trend on BLM is down. This can be seen if you graph the last 12 months, or even less, if you consider the high on 1st Sep.

The medium term is sideways. We are trading a relatively wide range between 265ish, the intra-day lows on 30th Nov and 3rd Jan, and 463ish, the intra-day highs on 3 consecutive days, from 11th to 13th Dec. Bollinger bands are heading towards each other, confirming that the consolidation process is carrying on.

The very short-term is positive. The 10th Jan gave us some good reversal signals, namely a tweezers bottom and a Doji. Candlesticks signals are very short term in nature and those signals have proved to be effective, given the recent rise, but, in virtue of the same rise, are no longer a valid reference.

On Friday we gapped up, or, in candlesticks terms, we left a window open.
I will focus for a while on this gap. Gaps are well dealt with in nearly any of the most famous books on TA, hence I will not spend any time here summarizing the common knowledge.
Instead, I would like to draw your attention to few elements.

Gaps are relatively uncommon. This is because very few times major news occur over night that can dramatically change the market participants’ global perception. When they occur, it is because, indeed, this perception has dramatically occurred.

In our case, we can say that, at the opening of the market on Friday investors were much more bullish. We do not need to establish whether they were right or wrong. What we need to do is to find, amongst other indicators, a confirmation, that, indeed, all that excitement which brought BLM to be dramatically more expensive, is still there in the market. If we do not find it, we may well conclude that momentum is temporarily finished.

We can check the amount of shares traded at bid and ask in the 1st 30 mins of the session. This is the average time it takes brokers to fill the orders retail investors placed ahead of the market opening. Here are the figures.

Bid 325,666 Mid 549,225 Ask 327,037.

What do you think?

Let’s carry on. Below is the same reading at midday. I chose midday because this is the time news from the States begin to impact the UK market. It goes without saying that we are talking about middayish. My reading, still, is at midday.

1,773,883 2,487,516 1,148,430

Mmh. Interesting. What do you think?

Ok, let’s see the final reading for the day.

5,008,401 4,165,763 2,916,718

Oh, oh! This does not look very bullish, at least not to me!

My reading is as follows. We had a glorious day on the NAZ on Thursday, retail investors came back home, switched on the telly or logged into their PCs in the chat rooms, found that, magically, everyone was happy and cheerful since we had seen the worst on the NAZ, and, as a result, placed their buy orders for BLM, which were filled in the 1st 30 mins of the session. For the remaining part of the day, it is quite clear that more and more people were happy to close their longs.

So, I have now come to the conclusion that buyers pressure is more likely NOT to be there on Monday morning.

Still, I need to know if BLM is a good stock to short on Monday, or whether, for example, I should wait and buy it on the 1st minor retracement.

Let’s look at stochastics (you should be familiar by now with my article on stochastics, if not, it is in the archive).

The %K has just crossed from below the oversold area, while the %D is still oversold. What I do, is to back test how good/bad this would have been a buy signal in the past.

Oh gosh! Since Feb 2,000, the only time I would have make money going long on similar pattern would have been on 5th July!! (This is just an example of the validity of the use of stochastics I suggested in my article).

Let me try something different with RSI. I take RSI at 14 days. I am looking for positive divergences, in other words, a similar pattern on the share price and RSI, which is still in process on the share price graph, while it has been completed successfully on RSI.

I take the RSI high on 1st Sep and then again 11th Dec and draw a line, which I then extend..to touch right spot the latest RSI reading on Friday!! This is a mirror of the resistance line on the share graph, starting from 1st Sep down to 13th Dec.

Something unusual happens here. The share price has actually broken this line already, and even managed to close above it!

Normally we are after the reverse situation, a breakout on RSI anticipating the one on the share price.

Interesting. We will come back to it.

A quick look at Macd and the 5-15 days Mas. Macd is positive, and the 5 MA is bending up, although still below the 15 days one.

Let’s check volume. Ah! A positive divergence on the on-balance volume. Its reading is the highest since 15th Dec, when the security price was higher than now.

Ok. Let’s wrap it up now. BLM is testing a major resistance line. We had a breakout, but not the confirmation of it. The recent rally occurred on increased volume, but we know that this is not crystalline buying pressure.
I want to wait. Definitively not a stock to short. There is also a double bottom there, another reversal signal. I do not think I would buy at current levels. I am too nervous about doing this, due to the large amount of shares at bid on Friday.
There is a clear consolidation pattern going on.
My decision is to sit and wait for a better overall picture, possibly for a confirmation of the breakout.

The above does not constitute financial advice.



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The above does not represent financial advice.
 

waldorf

1
141 1
Great summation, BLM have and still are a favorite , I was unable to buy at 267p a while ago due to computer probs.
Missing out then , i've not been back in since. The answer to my way of thinking is that the Bulls are not ready yet,the bears are still hoping, so daytrading appeals more and more giving confusing TA.
COl
 

titus-uk

1
291 5
Charty - thank you for your excellent analysis. Sold out today with 5% profit - happy for 24 hrs invested in the company. However, I left for 2 reasons:
1. What you said about the bulls was exactly right. Today 4.8M sells to 1.2M buys. Makes me think the majority are taking profits and leaving. This tie I joined them!! Good call.
2. Concerns that the Naz is reaching resistance. Last time it fell back from here. I rather suspect that this will do the same this time. If so, both it and BLM will fall before bouncing back again. If so, the trading range may be confirmed, and it is up to us to play it.
Remember, a profit is a profit is a profit.
Mark
 

Uncle

Established member
671 2
Mark.........You set an example to many with your above post....small profits compounded make for riches.

Best wishes
 

CHARTY

Active member
119 1
This is the last link, we just leave it here so that at the end of the week, if anyone cares to review this thread, everything is handy!

Mind you.

This is meant to be a case study.

No queries, no comments (good or bad)..and I am not going through the same exercise again! (only joking!)

Here is the new link, anyway, John has already posted this.

http://www.themestream.com/articles/294905.html?pid=002401000001
 

Cigar

Well-known member
292 13
I'll be devils advocate.

1. I would say it is only just consolidating. Yes, 2 bottoms but a single top. The cycle from 1/12 to 1/01 is typical of a bear cycle. Highest price in the 1st qtr, then mid cycle dip, then lower high in the second half. Therefore we are buying into a downtrend.
2. Can't blame the sellers on Friday am. If they bought around the price of the doji, they will have made a nice 10/15% in 2 days. Good business in a nervous market.
3. Heavily Nas orientated, therefore price can change on a whim.
4. Every retail buyer and his mother trade this one. This attracts MM games. It attracts traders with Chartys' enviable skills. You've got to have this level of skill to compete.

Maybe high reward, but very high risk also.

Remember what Dr I says:
'We're here to make money..
if you want excitement.. go fight Tyson'
 

yorkie

Newbie
7 0
Hi, Charty
Great post above on Baltimore-very useful.
Can I ask you which you rate as the best sites for viewing trades. Above you quote various Bid, Mid, and Ask prices at which trades have gone through. I read various postings where people question the reliability of trade figures on several sites. I realise this is all down to opinion but I was wondering which site you use for trade details.
 

CHARTY

Active member
119 1
I'll answer everyone concerned here.
1) Yes, BLM very risky.
2) Yes, traders are very boring. At least myself, I am very much risk averse (I have been watching the Naz today, see my last article).
3) Bid/ask. They are not 100% reliable, but, statistically, as long as your feeds are fine, probablity laws dictates that the average should be correct. What people do not stress enough is that institutions are very often filled at better prices, at mid, or close to mid. But, again, according to probabilities, the average should be fine.
4) My sources. I use sources not available to retail investors and relatively common within institutions. Some time ago I did a test on a couple of days of reported trades on illiquid securities (in order to have less samples to test). Feeds proved to be extremely correct.
BONUS QUESTION. Would anyone care to point out how we could spot a breakout on BLM and what should we look at? (I mean,, level and all that kind of stuff)
 

Cigar

Well-known member
292 13
Not sure if this is a breakout or trend change, possibly the latter.
Note the double bottom with the 2nd bottom not quite as low as the first.
A nice confirmation is the OBV (down)trend line being broken. This seems to confirm very early also. Look at a different share, in every way, Hilton Grp, HG#. Same long downtrend, double bottom and OBV t/l confirmation.

I'm making this comment more as a comment about the OBV confirmation. Its very clear and precise, and confirms really quite early.