05/17/2022
If you trade often, you probably have a list of stocks that you might consider to be “Frequent Flyers”…
And if you don’t, you should.
Sure, it sounds boring…
The monotony of trading the same stocks… the same setups… at the same time — every year — it can drive you nuts.
Until one day when the market throws you something with a little flavor…
(Source: getyarn.io)
Those are nice, but I’m talking about having a “universe” of stocks that you know well enough to always come away profitable.
Today’s Before the Bell is about a stock that I’ve traded for the past few years and one that the RapidFire team recently took profits on.
This is US Energy Corp. (USEG):
Daily on the left, hourly on the right.
As you can tell on the daily, USEG is a volatile one, but if you know the support areas, you can always snag some here and there when it’s down and trade lazy…
Hanging out on dry volume under $4.00 seems to be the way to go.
Charts like USEG are built on support and resistance.
This sounds obvious, but what I mean is that the accumulation game works well when you’ve identified where the price holds for long periods of time…
In the near term, local resistance lets you flip shares here and there around your core holding.
Use the hourly chart for that.
If you take 5000 shares for the eventual “homerun”, maybe grab an extra 1000 when there’s a quick dip or you can get it at a ridiculously low price in extended-hours trading…
…then flip it later that day or week when it brushes against the high end of the channel to decrease your risk.
You can use ATR or plot resistance where the wicks of the candlesticks are. The red horizontal channels show precisely what I’m talking about with the green channels illustrating support…
Now, looking at the lower chart on the daily, the indicators are relatively flat…
But if you’re willing to accumulate, the higher lows on both the RSI and MACD show a slight bullish divergence (lower lows in price, higher lows on oscillators).
Volume is sneaking up as well with nearly double the 30-day average just yesterday… this is arguably the greatest factor when trading these types of setups.
With enough volume, resistance at $4.40-$4.60 can fall easily, making ~$8.00 the next line of defense.
After that? Clear skies…
Buy at support, sell at each level of resistance.
Keep moving,
(Disclosure: I hold no position in USEG.)
This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.
