BP Watch

You can hear the bands and wild cheering from hundreds of miles away: BP plc. (BP) has succeeded in capping its underwater gusher in the gulf. BP bulls rejoice! Yes?

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
BP $43.15

At 11:20 a.m. Eastern

Uh, no. It is true that British Petroleum (as it used to be called) has moved to bull phase on the both the parabolic sar (first phase switch since April 22) and Person's Proprietary Signal (first switch since April 26). And it's also true that the macd this morning was briefly above the zero-line on the fourth day of a rise.

But the chart actually bodes rather ill for this bad news/good news stock.

First, yesterday's 6.7% gap up has been largely retraced in gap down and intra-day decline so far today.

Second, the stock has been on a downtrend since Nov. 6, 2007, when it hit a high of $79.77. Since then, it has declined through a series of swings (lower highs, lower lows) down to $33.70 on March 3, 2009.

Reversal Levels

• $60.98, +41.3%
• $57.69, +33.7%
• $52.00, +20.5%
• $45.57, +5.6%
• $43.15 <== You are here.
• $40.61, -5.9%

The most recent leg up peaked at $62.38 on Jan. 19 of this year, and the price has since been back into a swing lower. It would take a rise of the April 15 swing high of $60.98 before BP could be considered as having even the chance of a renewed bull trend. As a very short-term play, sure, why not. But the savvy trader will realize that any bull play on BP is counter the larger bear trend, and also is subject to huge news and policy surprises.

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Abbreviations:

• psar - Parabolic Stop and Reverse
• adx - Average Directional Index
• pps - Person's Proprietary Signal
• ma20 - 20-day moving average
• macd - Moving Average Convergence-Divergence
• sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.

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Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.