Long $BSMX Day 9 Analysis

Today was a good call from yesterday’s game plan. Ok, I wasn’t entirely correct. I said if earnings were bad I thought we would have a knee jerk reaction. Earnings seemed pretty good, but we still had a knee jerk reaction. As I said I would, I bought the dip.

Weekly Scorecard
CostCloseChangeTargetHighTarget%
$10.18$10.08-1%$15.00$10.7011%
I added to my position twice this week, both times on dips. The week ended today with earnings. The action looked like a shake out to me.

micro analysis

Here is today on the 15 minute chart. This morning earnings were announced and it made for an interesting day. The earnings seemed good and EOY guidance was increased. Never the less, it opened badly. The first bar I noted was particularly scary. That was a big drop on what, at the time, was big volume.

In that move, I think a lot of profits were taken and lots of stops were stopped out. As nervous as that drop was, I got what I was hoping for about 45 minutes later. That other noted bar, HUGE volume on a big move back up. The volume of that bar looks about 2.5x bigger than what I thought was big volume on the down move.

After all the drama, it was crickets. It did pretty much nothing all afternoon until the close. At the close volume came in again and it closed exactly at my upper trading range resistance.

I think what happened was, this morning the MM’s started a mark down after the EA. They used the news to manipulate the price. Their intention was to create fear and take out stops, and it worked. They got it all the way down to $9.74 from $10.41. Then, at it’s low serious volume came in on the buy side. I think MM’s were scooping up all those cheap shares they shook out of retails hands. Remember, I think we are in accumulation and starting phase E, which is a trend up to the next area of congestion. The MM’s will want to get as much as they can before it starts trending. They will be aggressive and use this news as a last chance to fill all their inventory with cheap shares to sell at higher prices.

After they were done with their manipulation they left it alone, and it did nothing. Finally, at the end of the day, buying came back and it closed stronger right at the upper trading range resistance.

macro analysis

Here is today in the context of the last six days. Today went right down through the upper channel line and upper trading range line to move back into both those areas. By the close, however, it closed right back at the upper trading range line.

Six days ago I was saying I expected a test of upper trading range line at $10.08. Then two days later it made a move down to the upper channel line, but never breached it. It walked up the upper channel line for the next three days. Because of that, I changed my test target to $10.20, the upper channel line, from $10.08, the upper trading range line.

Today, it looks like I may have been right the first time. We dipped well below $10.08 and then came back and closed right on it to create that nice long lower wick. We will know for sure next week, but as of now, I’d say that was the test and it passed. In fact, I added to my position once it came back.

For as far down as it went, you can see in the micro analysis, the bulk of all that volume was actually to the buy side and was absorbing the fear. I see that as strength despite what it looks like on the surface. That is another reason I bought more today.

global analysis

Here is the weekly. For all the drama, we ended the week with only average volume. I thing this week was the retest of the trading range, which is typical before it moves into a bona fide trend.

tomorrow’s game plan

Today and this week ended with that long lower wick candle. I see this as strength as today’s earnings were used by MM’s to manipulate the price and scoop up some last chance cheap shares.

If the MM’s are full, and they should be very close if not already, I will be looking for some good push to finally get us clear of the trading range and into a trend. Like a ship pushing off the pier. It needs some full engines ahead to get it out into open water.

 

Leave a Reply

Your email address will not be published. Required fields are marked *