LEI - Small cap buy set up

Encore Energy

Gastar

I watching for a break in the descending trendline, looks promising though as it already cleared the EMA's.

Apache

Inter-Oil Failing

Some Bull Flags

PTR is on my Short List

I shorted this stock with good success, and I like the setup again this time.  CVX, SNP, and others look interesting, as well.  Scan for the E and P companies.

Noble, Not So Much

I like using the 13 weekly EMA as a bull/bear line, and Noble broke that line and also weakening relative strength.  A head and shoulder is also forming on the daily.  My trade plan is as follows.  I am in with a 36/40 call credit spread for $.40, I am out if NE breaks $35.  If/when the neckline breaks I will place a $30/25 Feb debit put spread, close at the measured move.

Energy Stock Breakouts

A chart pattern I always look at is when the lower bands of the 3 month LR intersect with the 6 month, with price.  Below are three stocks that met that criteria, and decided to breakout.  In fact I suggest a look at the entire sector, it looks constructive, near term.

ERX, Gravity per Chance?

It is probably obvious for those who are following that I think we are somewhat stretched in the commodity space.  ERX has had a nice run (chart one), and looking at it a different way, you can see it is stretching its LR for the six month channel.  My play is to short (via puts) in the morning, with the top of the channel as my exit, if wrong.  Due to decay and volatility fear, buying puts is preferable to buying calls on the inverse.  My target is $45-46 area.

I hold a a lot of oil MLP's, and used ERX, DIG and DUG to to hedge my positions.  My oil portfolio barely noticed the 2008 crash using this method.  I also took short positions in PTR (puts) today, and DO (call spread) last week.

Oceaneering International, Trend Change?

A favorite pattern for me to trade is the Three outside down candlestick, a definition, from Leavitt

The Psychology
In an uptrend or within a bounce of a downtrend, a bearish Engulfing pattern forms. By itself this pattern has moderate reliability as a reversal indicator, but when the it is followed by another black day (preferably on strong volume), the overall pattern becomes much more reliable.

The bearish Three Outside Down is a continuation of the bearish Engulfing.

If I can get a good fill I am going to sell a January call spread 75-80 sometime today.

Read Barrons and WSJ this Weekend

For me at least, this weekends Barrons and WSJ opined on many sectors/areas of interest for me; Extreme exuberance, low volatility, rare earths, China's oil and gas industry, solar inverters and wind energy/components.  I have also recently posted my concerns in the area of rare earths, solar energy and China oil and gas, but a new name came up that I have traded in the past, American Superconductor.

American Superconductor relies on one, yes one Chinese supplier for 80% of their revenue.  That company is Sinovel, and in their latest filings they reported production vastly outstripping sales and wind energy farms sitting idle in China because they are not connected to the grid. 

If you are long this stock take heed, but these articles are speaking some larger truths, we have some serious imbalances forming due to the nature of how the Chinese manage their economy and the reliance some companies fortunes are tied to them (MCP, REE, AMSC), and if we build it, they will come mentality that is creating excess inventories in some hot industries that rely on Government largess to grow (PWER).  Power One's margins are twice that of the largest Inverter company SMA, and inverter prices are expected to fall up to 20% next year into the teeth of falling subsidies.  This is hardly a growth story for a growth stock.

Finally, the WSJ noted that margin is at extreme levels ($300 billion) and every time it reaches these levels a significant retracement occurs.  Also of note is the use of leveraged ETF buying on top of the use of margin, that is a recipe for disaster.

Be careful out there.

NOA looks interesting

NOA appears to me to be forming a bottom.  It just broke through the 200 EMA and a bull flag yesterday and is approaching a resistance area at the downward trendline.  A break of that trendline puts the old highs in play.

I will be a buyer on that breakthrough.