Giants Among Us

September 8 , 2014   There are Giants among us indeed.  Have you seen any?  In my last report I mentioned a few (see  DGLY, JRJC,HGSH, etc) and today (Now Tonight- I tried to finish this report Earlier today, but it didnt happen) That question remains even more valid, they are popping up more & more. As you will see, the question is not only  “Have you seen any Giants?” but “Can I catch a Giant?”. It is absolutely a traders paradise out there.  Before we get to that, let me discuss the Markets . These charts are from this weekend when I intended to write this, and since most are long term charts, I will still use them- nothing has changed.

Originally I wanted to point out that as these markets break to new highs, they also simply consolidate, pullback , run higher…basically “Do their thing” in an uptrend. Nothing really too unusual thus far, but within these markets, some equities are growing up in a GIANT way.  Beaten down stocks with Strong earnings are taking off like Rockets on the launch pad.  It makes me wonder, are we going to just see a blow off parabola , irrational exuberance stage in the markets eventually too? I cant tell here yet, notice here how the markets themselves just seem to be acting normally.

 

 

And on this chart of the SPX , each pullback so far…despite Geopolitical concerns , The Fed, Dragi and so on, are normal retracements in an uptrend…

 

 

SPX – Climb that wall of worry!!

 

 

And on this Monthly chart of SPX , you can see the previous signs of a top in 2000 & 2008 arent similar to what we have now, but if we dont get a larger correction soon, it does begin to look a little parabolic…

 

 

 

 

BIG PICTURE :  The RUT & IWM have paused, done some sideways consolidation, but is it a sloppy toppy move?  Doesnt look it to me so far . The RUT is climbing a steeper incline and even looks like a Bull Flag on the Monthly chart…

 

 

IWM – double top or consolidation? Time will tell..

 

 

Now just a Quick review of a few charts from last weeks report ( and then we’ll discuss those Giants)

 

Recall that VMEM had broken above the 10WMA as a buy, and the triangle looked bullish

 

It did break out, but I sold it today, volume is light & I now expect a back test

 

CMGE had huge volume but even more…GREAT EARNINGS!  thought it went from $12.50  to $20 already ,  It was set up to move higher from $20!  GIANT move , really.

This was my chart

 

Follow up ….CMGE has now gone from $12.50 to $28.50!!  Again…EARNINGS WERE GREAT.

 

 

VJET has not rocketed yet, but still looks ok…this is just the followup view from today . Break out, back test. (Needs more volume soon though)

 

 

 

OK, its time to talk about the GIANTS in the valley.       Have you seen them?   I will show you what I mean, and  When YOU see crazy Giants walking about in the markets , one after the other, You should say to yourself…   Where do they come from?   Have I seen this before?    What caused it , and is it likely that  there will  be more? 

And the answer is – there seems to be more

 

DGLY , our first GIANT up for discussion in this  LESSON:

 

This is a huge move w/ Volume on the daily by AUG 22   and its usually already extended–   DGLY AUG 22   $3 to $9

 

 

WHAAAAAT!?? HOW? this is becoming such a GIANT move?  By AUG 29, its now $3 to $20 in 2 weeks !!

 

 

 Years ago I studied a famous  investor that specialized in looking  for LOOOONG BASES,  beaten down stocks but not dead.  Not Bankrupt, just hibernating.  Then when earnings improve or Demand increases , also if “SHORTS” get caught short when demand surges in , you see a quick  turn around and a break from that base.  It POPS with strong volume and moves above certain Monthly or weekly month moving average strongly.   Since SELLERS have long dried up & it has BASED out for a long time,  the buying/ Demand causes a POP that eventually cant be stopped.  Often the initial POP is the warning sign to  “PUT THIS ON YOUR WATCHLIST” …it may pause and drop a bit, but then if it has good earnings or increased demand…WOW can they move. Now lets Look at DGLY monthly . It had that base & DEMAND came knocking.

 

 

 

Lets look at more examples:    Last week I showed this WEEKLY chart  (I loved it because of the long base & Recent POP & Uptrend with VOLUME.

It was also set up like DGLY, It was already up to $6.32- did it continued higher?

 

 

HPJ – almost hit 8, pulled back and still looks good.

 

Really there have been quite a few “GIANTS” rising up among us. I dont have time to show charts of all of them  Look at  JRJC, HGSH, EJ, etc for example. Look on a 3 month daily…then look at a 10 year weekly.  HGSH  =  roughly $2 to $10.50  in a month.   JRJC =  roughly $4 to $12 in 4 days! 

Its HUGE , but look at JRJC on a long term chart  below and the move looks muted…and if market conditions remain the same, plenty more upside.

 

 

SO————- That brings us to———– Can we spot a GIANT before it grows into one?   Yes, I actually have been able to with some of the above stocks, the hardest part is staying on for the ride! 

First You need to wait for them to report GREAT EARNINGS & if the  Demand is there, along with that LONG BASE…you may get a strong follow thru.

 

My first example is what I will call “THE HEART BREAKER”.   ‘RADA’ 

Its a heart breaker because I had my eye on this this weekend ,  it had popped before earnings from a LONG BASE. I was writing this report this a.m. about it while waiting for earnings. I had written down in my notes that earnings were scheduled to be released for SEPT 10,  but they came out …at 11:30 a.m. TODAY!  Heart breaker!

 

I had this drawn from Friday,  last Thursday & Friday it rose $1 (Ahead of earnings) so it caught my eye. I took note of this LONG BASE.

 

 

Today  (I didnt get to buy it)  it looks like this now!  Yup,  $6 on 40 Million volume.  GIANTS among us.

 

 

  I am going to wrap this up by showing you 3 more stocks from here.  They fit the category above of having long bases, sellers appear to be out   (Better yet if ‘SHORTS’ are in there for a short covering rally), and most importantly the earnings are good.   I have a large list  of candidates , but these 3  have released earnings already, and  they were good.  The charts are showing signs of strength.   Please do your own D.D.   Check the earnings for yourself.  Some are already moving higher, but dont just jump right in , buy a pullback or look for a low risk entry or a proper entry.  (JRJC pulled back to the 20sma and turned higher today….hmmm, maybe?).

 

Now lets look at VIMC. I got in this last week on the pullback to the 10sma.  This daily chart looks over-extended & risky to enter here  (And it may be) …some might even say  “Take Profits” – But earnings were great.      Up 272% Y.O.Y. ,  and it just keeps moving higher. It may flag here, cup & Handle style.

 

 

A 3 month chart shows that BUYING was gradually picking up , Earnings were out Tuesday and it continues upward. Is it extended on the daily?

Maybe,  $3 to $5.50 is a good move!    Then why didnt I sell?

 

 

 

Now when you look at VIMC Weekly,  I think after our discussion,  you’ll see why I dont want to “Take Profits” just yet. Yes it may go sideways and cup & Handle. It may even pullback to the 10sma again.   Jesse Livermore, legendary stock investor  said to ‘sit tight if you know you’re right ‘ to allow the gains to add up.   (THIS Set up makes me think I’m right to sit tight , at least for now )

 

 

OTIV on a daily had a nice POP in volume with earnings. It also looks overbought here.

It is extended far above that 20sma, so you could put this on a watch list for a pullback to the 10 or 20 sma …However…

 

 

OTIV  WKLY   Notice  that todays volume is HUGE . 3 million today is way above the entire weekly average. Will it march right up to $4.25 to form a cup in the next week or two?

 

 

Now I’m looking at the OTIV Monthly  big picture, and it looks very bullish. LONG BASE, Earnings improved, demand increasing. Shorts covering?

The VOLUME for SEPT is likely going to be HUGE. We had 3 million today alone. So if this breaks above $4, the potential push higher could be Giant.

 

 

Lastly:  Chart 1 here :  I sent out a couple of emails / notices to a few friends last week about  MOBI. The earnings were good and the set up was there. It GAPPED open on earnings and I waited & waited for it to pullback to that Gap. I often wait for the gap to fill, but I had read where Jesse Stine said that he will just buy above  the gap-  in case it doesnt fill. So I bought the gap and added on the reversal …  Chart 2 – today – it is a very good set up & is not overextended yet, it may pause here too, but should go higher ,I.M.O.

 

 

Chart 3:  The Weekly MOBI LONG BASE

 

 

In this report I wanted to show you what I have been ‘watching’ and  some  ‘thinking’ that goes along with it.  Please be careful with these FAST MOVERS, they act like leveraged 3x ETFS   ( in both directions,  Up & Down) .     RISK is up to you.    I DO NOT suggest mortgaging the house & jumping “All In ” because  VIMC or OTIV resembles DGLY’s chart 2 wks ago.    NO!!  I am just saying this…

 

1. Do you suddenly see Giants appearing in the field?

2. Can we figure out where  they came from?

3. Do they come from a similar looking Home Base?

4. Notice that they all seem to carry a purse of money after pay day  (earnings).

 

OK- then we have a start  !  We can look for beaten down stocks that suddenly are surprising upside on earnings. Often they POP with Vol  after reporting good earnings, pullback on lighter to maybe the 10 or 20sma…a Low risk Entry.   (  I’m not opposed to breaking a few rules either.  If OTIV breaks out on that  weekly chart with strong conviction, I may add a bit more there.).   Just be sure to manage risk, and keep an eye on the health of the overall markets too.  If they get too extended and decide to correct hard, they’ll likely suck down the good & the bad.

 

I hope this report helped , and thanks for stopping by. Happy Trading! 

 

~ALEX