I’ve done my charting for the last 3 trading days, beginning with last Monday. There have been no new signals generated by my indicator, but there are some intriguing possibilities. As I expected DNR retreated back below the centerline from where it had been at .03 on my indicator, but it is back up to the centerline after only 3 days a may shortly shoot above the centerline. When one looks at the chart of DNR the price action definitely seems bullish since on Friday the price ended the day barely above the 20-day moving average for the first time in a long while. If the price of DNR goes well above the 20-day moving average on Tuesday on heavy volume I could well see a nice buy signal on my indicator. If I do get into this position the options are so cheap that I may buy a dozen calls.
The way I am managing my paper trading account seems to be working. I noticed Friday that my paper trading account is now valued at more than $7,000.00. By getting out of my long position in AMD because the stock was basically doing nothing and it was posing a risk to my capital, I preserved my capital by taking a relatively small loss. I then got into a long position in NBR after a strong signal and it is already producing results. I input an order to sell 3 NBR calls at $1.75 a piece. I noted that my indicator is vindicating my decision to get out of AMD after it is clearly approaching the centerline showing a value of just .27 on my indicator. It turns out that the 2-days of high volume performance could have merely been an exhaustion event that saw the last of the buyers coming in.
I noted that the stock I am following with the symbol OAS is close to a possible crossover above the centerline on my indicator. It’s current value is at -.03. If one looks at the chart for OAS it appears that this stock is about to break out of a flag pattern to the upside and could go much higher when one takes into account the stocks last upward move. Thid is another stock to watch for an upside signal. If I buy calls for OAS this next week as well as for DNR my paper trading portfolio will be taking on a much more bullish nature. I will be needing to check the various sectors to determine what changes there are to take advantage of and whether or not these two possible longs are truly wise. I will try to put out a new post tomorrow.