Employee8 asked today in the comments section about several charts. I think he may have answered (or the market did) his own question on [[MOO]]. However, he mentioned that the guys on Fast Money were talking about [[CHK]] and [[JOYG]], and he wondered what my opinion is about them, especially if the indexes bounce this week.
First, these are not the type of stocks I would buy to take part in any short covering or reflex rally. Actually, what we want to buy are the most beaten down stocks of the Dow Jones, the S&P, and the Nasdaq 100. Pick a few that have been killed over the last three weeks, and buy those. Rob Hanna’s excellent research on his blog Quantifiable Edges confirms this. If you visit his blog, you will have to do a little searching to get to the research mentioned above, but most will probably enjoy whatever else they stumble across there.
I should be clear that I do not like buying stocks in a bear market. Seems rather masochistic. Therefore, it might be instructive to take a longer view of things. The 3 year weekly chart of JOYG is certainly bullish. The stock has created a multi-year cup-like formation. There are negative divergences in the MACD and Stochastics, as they were not able to make a higher high when the stock did. Note that the stock reversed at the previous high, almost to the penny.
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The daily chart of JOYG just bothers me. I do not like raggedy, jagged charts. The volatility just kills me, so I stay away from them. However, if one does not mind the swings, it has certainly been a winner. I would wait to see how JOYG reacts to the 50 day average. If that does not hold, watch the 200 day. It is a bear market. It is not like these stocks are just going to run away and you will never get another chance to enter. Patience will pay off. I think JOYG will roll over a bit more. Any change in the coal market fundamentals could cause a severe sell-off. Democrats in the White House?
 
Now the 3 year weekly of CHK is a beauty. I love it. What a beautiful saucer shaped base. There is really nothing about this chart not to like. However, as I mentioned above, it is a bear market. Let it come in before buying.
The daily chart of CHK shows just how far this stock moved in a short period of time. While the RSI(2) shows it will likely stabilize for a few days, I think it is probable that $41.00 is a magnet. I would want to see how close CHK will get to $41.00 before buying. Then, once it nears $41.00, remind yourself it is a bear market, and re-evaluate, one last time. Actually, since Danny is short CHK, the stock will likely reverse tomorrow, to make new highs.
Note to Employee8: These comments were not really directed at you, or anyone else. I’m just sort of ranting a bit.
Wood,
On CHK there was a consolidation area. This area was due to there being a Convertible Preferred Stock that was eventually called. When it was, the common took off, the high price of oil helped I’m sure.
On memory, fundamentally, this is a horrid stock, but I’d have to check to see if things have improved.
jog
Wow, Duc really doesn’t know shit about stocks, aside from numbers. He might as well be a human calculator, since CHK IS A FUCKING NATURAL GAS PLAY AND NOT OIL.
Thanks Wood …. The gist of the CNBC report seemed to be that the length of the base building (3 yrs) would result in the breakout being as vertical as the basing was horizontal …. that would seem to be quite an extended incline and worthy of a long term investment if that were the case.
Sadly Jog made sense. CHK did offer a shit load of convertible debt. FLY of course is more right. That is obvious.
wood, 7-star, thanks.
Regarding my short, I covered half today at 44.10. There is support at this area. I was going to cover some at each support level down to 42.
Keep in mind that is after terrible luck caused me to cover at the all time high.
Behold my benevolence to our readers
Oil & Gas go together like Mom & apple pie.
Chesapeake Energy Corporation is a producer of natural gas in the United States (first among independents). It owns interests in approximately 38,500 producing oil and natural gas wells that are producing approximately 2.2 billion cubic feet equivalent (bcfe), per day, 92% of which is natural gas. Its operations are located in the Mid-Continent region, which includes Oklahoma, Arkansas, southwestern Kansas and the Texas Panhandle; the Forth Worth Basin in north-central Texas; the Appalachian Basin, principally in West Virginia, eastern Kentucky, eastern Ohio and southern New York; the Permian and Delaware Basins of West Texas and eastern New Mexico; the Ark-La-Tex area of East Texas and northern Louisiana, and the South Texas and Texas Gulf Coast regions. In July 2007, the Company announced the acquisition of Kerr-McGee Tower from Anadarko Petroleum Corporation and subsequent sale of the tower to SandRidge Energy, Inc.
I know you didn’t just throw a company description at me, for CHK. Right?
That’s like throwing a description up for MCD. All Americans know CHK is king of natty.
And, no, there is zero coorelation between oil and natty prices. Entirely separate.
In other news, GS will be laying off a lot of losers soon. Sell that fucker twice.
Did I say *correlation* twixt oil & gas PRICES
No, I did not.
Where there is oil, there is usually natural gas.
If, you have both, then even though you may be a primary producer of one, the second will be accretive to earnings if price rises in the secondary.
Of course I threw the company description at you.
Why?
Because I wouldn’t want a repeat of your cardboard boxes faux pas.
jog