DRYS – Forming A Wedge

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DRYS has formed a wedge and currently testing its 20D & 200D MA. I will accumulate DRYS shares if it retraces back to $6.20 to $6.50 price range (wedge support). $6.00 is another very strong Fibobacci support level. 

The probability of the stock price goes below $6.00 is low because the global economy is recovering and the Baltic Dry Index (BDI) is showing an uptrend. If this upward trend continues then that will be the proof that the economic uptrend will continue into 2010. The BDI is a great indicator for the demand of Dry Bulk goods (Coal, copper, lead, silver etc.). Increase in BDI equals increase in global economic activity. That also indicates the Dry Bulk Shipping Companies will have a better earning performance in the next few quarters.
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Is Material ETF (XLB) ready to run?

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The Material ETF (XLB) is another ETF which will be benefited from the economy recovery. Raw material is the basic of all manufacturing products & infrastructures. Those mining companies and material makers will be doing well when there is huge demand of the basic material during the economy recovery. Another point to note is China is buying energy and material companies aggressively to ensure enough resources for future growth.

This XLB is primarily composed of companies involved in such industries as chemicals, construction materials, containers and packaging, metals and mining, and paper and forest products. Among its largest components are Monsanto, E.I. DuPont de Nemours & Co., and Dow Chemical Co. Top 20 stocks as of Oct 8, 2009 as follow:

The ETF is currently is on the long term up trend (200D MA on the up trend). 3 years high at $46 and current price is about $31. The immediate support level is $28.739 and subsequent support at $26.776.
My investment Plan
Entry Level: Between $27 and $29 (but need to monitor whether the price is still above 20D & 50D MA)
Time Frame: 1 to 3 year
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United States Natural Gas Fund (UNG)

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United States Natural Gas Fund (UNG) is an ETF to track the Natural Gas prices of Futures contract. Natural Gas is energy commodity and the price is influenced by the supply and demand condition. The ETF price has been beaten down 81% since its historical high of $63.48.

I am preparing to long the stocks as the economy will recover eventually and the energy consumption will increase in the long run. Furthermore, natural gas consumption will increase in the coming winter and this energy commodity price is expected to go up.

UNG is breaking out from its down trend channel and going to test $12.22 resistance level (61.8% Fibonacci Retracement). If it breaks and stay above the resistance turned support line, the stock price will probably be moving upward. The stock price is currently above its 20D & 50D MA support lines. If the stock price fails to break the resistance, it may move down to about $9.00 level.

UNG has just to trigger a “Parabolic Stop and Reverse” buy signal on the daily chart. MACD, RSI and Stochastic are very close to show bullish convergence.

My investment plan
Entry point = about $12. If the stock price fails to break the resistance and retrace back to $9.00, I will buy more and do a dollar cost averaging down.
Investment Time Frame =  1 to 3 years.

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