ARA Update

Recently, I posted about ARA as being a good potential trend trade and I said that it might form a cup and handle break out pattern. The stock has recently pulled back to form the first part of the handle and now the price just needs to breakout to confirm the buy signal. Here's the updated chart.

As you can see from the chart, the OBV is still trending up and the BB Width is still low. Now I would like to see a breakout above the short term resistance (see the red line on the chart) with a higher high in both the OBV and BB Width.

It can be tempting to jump the gun and get into a cup and handle trade before the breakout, but this is a dangerous way to trade. I've seen stocks set up this same pattern before the breakout and then drop like a rock. If you do jump the gun, only buy half the position now and add the other half after the breakout...and also make sure to have a solid stop in place.

As of now, this stock is very high on my watch list and I look forward to seeing how it plays out.

Good luck out there.

TLT

BoE Interest Rate, Weekly Jobless Claims and a Rising Stock

Good morning, there has been quite a bit of activity today and the stock market has only been open for half an hour. Currency markets have been shaken up quite a bit as the BoE lowered the U.K. interest rates by the expected 50 basis points, and the U.S. jobless claims fell but the number of people remain jobless rose...sending the dollar down against all the major currencies.

This morning I was short the Eur/Usd pair (yikes) and luckily I caught the reversal signals that my system gave shortly before the jobless claims were announced...although I suffered a small bout of insanity and racked up some losses due to emotional impulse trading between the two major economic releases this morning...will probably post on this later when I have more time because it was a textbook case of getting emotional and over trading. Long story short, I calmed down, got control of myself and I put on two very good trades in the Eur/Usd and GBP/Usd that ended up making enough to cover my losses and give me a small profit for the morning. Like I said, I'll probably post a play-by-play breakdown later tonight because emotional impulse trading is a very common pitfall among short term traders...one that can be lethal if you let it get out of hand.

On a brighter note, my stock watch list has brought a couple of interesting trend trading candidates to my attention. One is ANW (see below) and another good looking stock is ARA. This stock has started to break out of a nice rounded base and is strongly trending upward. It would be nice to see a slight pullback and then a new breakout to form a "cup and handle" breakout.
A couple of noteworthy factors in the above chart are the up-trending on balance volume that is setting new short-term highs, the higher moving MACD and the low level of the BB Width. It would be nice to the BB width breakout and start making new 2 month highs. If I were going to play this stock here, I would either wait for a pullback and buy a new breakout, or buy half my position here and then wait for a pullback and then a subsequent breakout to add to the position. With a strong trend in place along with good relative strength, ARA is certainly worth keeping a close eye on.

Good luck out there.

TLT