MMM, SiameseParrot, I’m still in the short trade, but it has gone against me, my stop level has been hit and I’m trying to manage an exit. I never trade in the first hour of the day and with other commitments by the time I got back to the market in the last hour I decided to hold until tomorrow morning, which is still consistent with my trading rules. Reason is there's a significant element of short covering in this and I would have been exiting at the day’s highs right under a strong resistance level at $12. I didn't think $12 would break today so decided to wait, although I admit the short term momentum is likely take it higher for another day. On the other hand volume wasn't particularly high today so we'll see.
Up until Friday close this was shaping up as a beautiful 11 week counter-trend and set for reversal. Fridays weekly doji opening and closing low seemed to complete the move up, we had three weeks the highs were levelling out, the larger trend on the monthly still down (with the Monthly down trend line still in place today) and NCM was set to roll over.
However, you longs have been saved by events in Ukraine clearly taking over. Not that I think the Ukraine situation will make much difference to NCM’s bottom line nor that we will still be talking about it in three months time. I also doubt whether any major investors buying this during the past 11 weeks run would have been on the basis that Russia’s about to stir up Ukraine. Just sometimes external events will come along and swing things your way and sometimes against you. That’s trading.
My take on the Ukraine at this stage is that this is how major world powers negotiate. Each side lines up some tanks, minor players mouth off angry words and posture and then a deal gets done. It’s serious in that enough pressure has to be applied by the respective parties to possibly get borders changed, but I doubt anyone is interested in starting World War 3. (Mind you some might argue that’s basically how the 1930’s debt problems after the ‘29 crash were solved with World War 2 – so who knows).
Nevetheless, it’s been enough of an event to shift the gold price temporarily up at a time when shorts are loaded to kick this stock down, hence forcing some short covering. There is no way I would go long here as your just gambling on world events that could resolve themselves in days, rather than underlying technical or fundamental assesments. It wouldn’t surprise me at all for this to be a few days short-cover rally and then a fall back.
But right now short term events are on the side of the longs and so I’ll take my medicine tomorrow morning and look for the next trade.
NCM Price at posting:
$11.99 Sentiment: Hold Disclosure: Held
