PFSW trading on Nasdaq Break out on Mar 27 2013. Photo credit ccvic.zenfolio.com
Time for another discussion about stock trading. If you don’t have a charting program, I would highly recommend checking out AmiBroker. You can Download a free 30 day clicking on the following link: AmiBroker official site with 30 day trial.
Today’s topic will be PFSW, which trades on the Nasdaq. On Mar 27, that stock had a gap up at Open and continued on it’s merry way. The price broke above the prior high of $3.72 set on Mar 04. The interesting thing with this chart is the cup and handle formation. The cup goes approx from $2.40 to $3.60 giving approx $1.20 of upside potential. On April 18 2012 PFSW hit a high of $4.40. That fits in well with the scenario of $3.60 + $1.20 = $4.80. On Oct 28 2011 PFSW hit a prior high of $4.55.
So we have potential resistance levels of $4.20, $4.40, $4.55 and $4.80. Myself I would be inclined to scale out of the trade as these levels are hit.
My Present Sell Stop is at $3.40. That give an approx $0.50 risk for an approx $0.50 reward. Not the best of odds. The thing that I like is that the potential upside could be around $1.20. Another approach might be to increase the sell stop. The high before the gap up was $3.55. A sell stop at $3.50 would not be unreasonable. Then move it up each day to say the prior day’s low. There are different ways to set a Sell Stop. Some may improve the risk reward.
The move up on Mar 27 was a large bar. Why did it breakout out? Who am I to know, it just did. Possibly a report coming where maybe they surpassed analysts expectations. Don’t know and don’t care about the why when I’m trading. I’m not in it for the long haul. If price reaches targets then I scale out or close the position. If the price falls and hits the sell stop, I’ll close my position. The fundamentals and the “why something happened” do not concern me.
Anyhow, Google is your friend to learn more about Cup and Handle formation. Http://finance.google.com also has great charting – well worth checking out. We’ll see how PFSW pans out into April.
Posted by: Vincent Banial
Disclaimer: The above is not meant as Financial or Investment advice. I am not a registered Financial or Investment advisor. I do own shares of PFSW. Do your own Due Diligence. Always seek out the advice from your own Financial and Investment Professionals before placing any bets at the Financial Markets casinos called the Stock Market. You can lose money, possibly all of it, when buying and selling or trading stocks. The above is not a recommendation to buy or sell PFSW or any other stock. The above post is for entertainment purposes only.