Market Report: Black Sheep Trader - A Glimpse
Stephen Oakes and I are working on a new trading system, called Black Sheep Trader, using consolidation breakouts and bounce-off bottoms to find profit opportunities. To date, our results have been astounding. Here now, is Stephen Oakes with a glimpse of what to expect. Enjoy.
Over the past few years, Jupitermedia Corp (JUPM:NASDAQ) has been extremely volatile as well as predictable. A major consolidation took place at the onset of 2005 and did not complete formation until May of 2006.
This chart shows what we technical analysts call a symmetrical triangle pattern. Once the pattern is identified, you would then wait for a breakout or breakdown from the pattern.
In this case there was a breakdown, signaled where I have drawn a red arrow on the chart. If you had shorted the stock at this point, near $14.50, shares would be worth only around $6.50 in less than four months. That equates to a 55% gain.
In need of a break, the sellers retreated while the short-term bulls stepped in for some quick profits. Again, the stock traded in a volatile up-and-down fashion, forming a descending wedge. This is just another period where the buyers and sellers struggle to establish a trend.
However, in my estimation we are already at the breaking point. You see, recently the stock broke down below the channel near $6. In the past few weeks, shares came up to test the floor, which it broke through, with no luck. Once the bulls realize there is no hope of getting back above resistance, shares will be liquidated and send the stock into another death spiral.
If you have a moment, we’d love to get your feedback on what you’ve just read. You can e-mail Stephen and me at Taipan@TaipanFinancialNews.com. Thanks.
Ian
