The stock moved into bull phase on Feb. 28, continuing a month-long run-up. The run-up, however, is faltering.
Three things not to like on the chart...
| sym | chan | adx | traj | psar |
|---|---|---|---|---|
| GG |
First, the short-term parabolic sar signal has moved to bear phase. Second, the average directional index (adx) has turned down. And third, the price has set a lower high and lower low for two days running.
What's to like is that the stock has pulled back from the lows on each of those two days. So, it's a decline but not a panicky rout.
| sym | bday | blevel | stop | 2-day? |
|---|---|---|---|---|
| GG | feb28 | $47.08 | $45.80 |
The price is also well above both the breakout level and the stop/loss.
One thing about a run-up is that there's not much in the way of downside price support, although the moving averages can also fill that role. The most recent swing low was long ago and far away, on Jan. 25. The swing high was on Monday.
Reversal Levels
- $50.80, +4.1% (swing high)
- $48.81 --- You are here.
- $46.40, -4.9% (20-day moving average)
- $43.95, -10.0% (50-day moving average)
- $43.50, -10.9% (200-day moving average)
- $39.04, -20.0% (swing low)
Bottom line: GG at this point in its history tests the mettle of the trader. It opens a window into the depths of your trading soul.
By the book, GG remains in bull phase, and will until the price hits its stop/loss level at $45.80. So, the phlegmatic and the sanguine trader will stay in the position. The choleric and melancholic trader, either driven to action or anticipating the worst, will close out, and wait for either an up day or a reversal of the parabolic sar back to bull phase before re-entering.
Two dates to remember: March 15 is when GG goes ex-dividend, with an annual yield of 0.8%, and April 28 after the close is when earnings are announced, meaning that we're getting into analyst volatility season for this stock.
Key
- chan: Channel phase, with green for bull trend, red for bear trend and yellow for neutral trend.
- adx: Average direction index location, indicating the strength, or the temperature, of the trend. Orange for 40 or greater, aqua (light blue) for 30 and up but below 40, magenta (light purple) for 20 and up but below 30, and brown for anything below 20. (Mnemonic: Orange for the overhead sun, blue for the surrounding sky, purple for sunset on the horizon and brown for the earth.)
- traj: Trajectory of the ADX, green for strengthening, red for weakening or yellow for unchanging. Note that if the adx column is orange and the trajectory column is red, then the position must be closed.
- psar: The parabolic sar, either green for bullish or red for bearish.
- bday: Breakout day, the day the price broke through the upper or lower 55-day price line.
- blevel: Breakout level, the price level of the line that was broken through.
- stop: The current stop/loss price. Early in a bull or bear phase, this will be 5¢ below the low or above the high, respectively, on breakout day.
- 2-day?: Marked with an "✔" if the two-day rule is in effect. Under the rule, if the price closes below the breakout level on each of the two days following breakout day, then the position must be exited.
About channel analysis
Read a detailed explanation of my channel analysis method, including trading rules.
Disclaimer
Tim Bovee, Private Trader tracks the analysis and 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.
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