Monday, November 13, 2006

Chart: Negative Divergences in GROW

If I were a betting man, I'd bet that GROW (U.S. Global Investors, Inc.) is going to run out of steam any day now. The recent breakout to new highs has done so with lower volume, lower RSI and lower stochastic readings than its September highs. What we have here is a textbook example of negative divergence, which does not bode well for the stock, at least in the short term. I woudn't be surprised to see a pullback to support at $34. A break of that support level could send the stock down to $30.

An aggressive trader could short now with a stop placed a little above $40. This is a risky trade since, even with the divergences, price has yet to taper off and the stock is riding the upper bollinger band. However, it could payoff big and the actual dollar risk is minimal with a tight stop in place. The more conservative approach would be to wait for a breakdown of the $34 level before entry. An "in-between" method would be to wait for price to come back inside the upper bollinger band, right around $36. I'm not yet sure which approach I'm going to take, but I will be monitoring this stock closely.

5 comments:

threadogie said...

TRIGGER ALERT: regarding your GROW comments guess your blog now gets delisted to the blog for morons list.

Anonymous said...

That was kinda harsh but I'd say you at least jumped the gun. Hope nobody tried to short that stock today.

threadogie said...

sorry, just getting pumped up for the "game of the century" this saturday nothing else matters this week but OSU~UM not even some cornball idea about shorting GROW so go ahead...yikes!!!!

The Market Speculator said...

You are welcome to go through the blog and track my *trades*. The record certainly wouldn't qualify for any "moron list".

Notice that I said it was a high risk trade, and unless you are an aggressive trader, it would be best to *wait for confirmation*.

Dogie, if you think you got game, you are more than welcome to post your trades on this blog.

Anonymous said...

GROW was a good setup for the daytraders as seen in other blogs. Dogie must be long the stock. Spec may be right in the longer time-frame. Keep up the good blog.