Phenomenal risk/reward at these levels. Has finally completed an ending diagonal. Commonly in ending diagonals the price overshoots the trendline causing a throw-over due to excessive bearishness or bullishness. Also at long-term support of $5.90.
While the price could potentially fall as low as $5.56, which is its lowest level since the stock has publicly traded on the NYSE, I do believe that the current levels present one of the best risk/rewards of the entire stock market. While I am primarily a technical analyst the fundamentals over the next few years for this industry are looking bright after a multi-year bear market. As they say, price moves before fundamentals.
Stock is a potential multi-bagger and unless you believe it is going to zero the current levels are amazing. This stock has been on my radar for 2+ years and is now forming a high probability bottoming pattern while industry peers are off their lows. Speculation is a game of probabilities and they don't get much higher than FRO currently offers.
'Be Fearful When Others Are Greedy and Greedy When Others Are Fearful'
Fundamentalists, the technicals are now on your side.
While the price could potentially fall as low as $5.56, which is its lowest level since the stock has publicly traded on the NYSE, I do believe that the current levels present one of the best risk/rewards of the entire stock market. While I am primarily a technical analyst the fundamentals over the next few years for this industry are looking bright after a multi-year bear market. As they say, price moves before fundamentals.
Stock is a potential multi-bagger and unless you believe it is going to zero the current levels are amazing. This stock has been on my radar for 2+ years and is now forming a high probability bottoming pattern while industry peers are off their lows. Speculation is a game of probabilities and they don't get much higher than FRO currently offers.
'Be Fearful When Others Are Greedy and Greedy When Others Are Fearful'
Fundamentalists, the technicals are now on your side.
Comment:
looking good so far but going to wait until the close or an increase on substantial volume before adding the second leg.
Comment:
really bad price action today. not enough, yet, to discredit this being an ending diagonal, but the price needs a serious reversal by the end of the week. a little lower is almost expected after today's close but there needs to be some sign of reversal and not continuation tomorrow.
Comment:
Got the reversal needed as explained in yesterday's comment to be able to hold on to the idea of FRO completing an ending diagonal. Hammer today on higher volume than the strong down day yesterday indicates a change in trend could be at hand. Currently still sitting on the first leg as the entire campaign waged was not up to par and stronger confirmation than 1 day is needed to put more money on the table when my trading has been off.
If this reversal is to hold true the gap today should ideally never be filled and the price should stay around this level if not move higher into the end of the week. This would give a weekly reversal signal which will be when I would add the second leg. There are some worrying signs that this may not be a true reversal, such as sentiment on websites (lot of bulls coming out of the woodworks) and the put/call ratio being at .084 today. While the put/call ratio is on fairly low volume (622/52) it is still a cause to be hesitant.
Two little asides with the first being my own psychological reasoning on why I think there is a distinct possibility a reversal is at hand not just in FRO, but in the entire tanker industry. After 3 days of heavy volume at or near all-time lows a significant amount of volume has changed hands. While thats not to say that price cannot see lower lows, a lot of weak hands have theoretically been flushed with strong hands taking their place at extremely attractive levels. Right now VLCC rates are at around $10k a day which is absolutely horrendous. From a fundamentalist's perspective, the rates should lead to lower stock prices and thus these past few days would mark what could be perceived as an opportune time to dump before the industry sees even lower stock prices. This goes contrary to what my learning and experience has shown. Price often reverses a significant amount of time before fundamentals see the cards change as positive sentiment for the future begins to take a stronger hold over the negative sentiment of current conditions.
Thinking ahead, should today be the first day of a new uptrend it begs a question that causes constant arguments among technical analysts. Does price cause the news or does the news cause the price? I'm in the camp that the answer lies somewhere in the middle. More often than not price causes the news but in certain instances the news causes the price. What happens to price should the GNRT merger not be on the table? Now I do not ascribe to the notion that the merger is solely what caused the reversal, as can be seen by my above analysis, but it could definitely accelerate a trend reversal by increasing demand.
If this reversal is to hold true the gap today should ideally never be filled and the price should stay around this level if not move higher into the end of the week. This would give a weekly reversal signal which will be when I would add the second leg. There are some worrying signs that this may not be a true reversal, such as sentiment on websites (lot of bulls coming out of the woodworks) and the put/call ratio being at .084 today. While the put/call ratio is on fairly low volume (622/52) it is still a cause to be hesitant.
Two little asides with the first being my own psychological reasoning on why I think there is a distinct possibility a reversal is at hand not just in FRO, but in the entire tanker industry. After 3 days of heavy volume at or near all-time lows a significant amount of volume has changed hands. While thats not to say that price cannot see lower lows, a lot of weak hands have theoretically been flushed with strong hands taking their place at extremely attractive levels. Right now VLCC rates are at around $10k a day which is absolutely horrendous. From a fundamentalist's perspective, the rates should lead to lower stock prices and thus these past few days would mark what could be perceived as an opportune time to dump before the industry sees even lower stock prices. This goes contrary to what my learning and experience has shown. Price often reverses a significant amount of time before fundamentals see the cards change as positive sentiment for the future begins to take a stronger hold over the negative sentiment of current conditions.
Thinking ahead, should today be the first day of a new uptrend it begs a question that causes constant arguments among technical analysts. Does price cause the news or does the news cause the price? I'm in the camp that the answer lies somewhere in the middle. More often than not price causes the news but in certain instances the news causes the price. What happens to price should the GNRT merger not be on the table? Now I do not ascribe to the notion that the merger is solely what caused the reversal, as can be seen by my above analysis, but it could definitely accelerate a trend reversal by increasing demand.
Comment:
Weekly doji on high volume. While the volume could ideally have been higher this was a shortened trading week due to memorial day.
With the doji, the weekly pattern has now formed a bullish harami cross pattern. While not much can be made of this pattern on its own, a change in trend could very well be at hand.
FRO could theoretically continue to consolidate at these levels for multiple weeks. A base is being built as the transfer of stock from weak hands to strong hands continue and theres no telling when demand will finally outtake supply. Would prefer to see this break $6.00 next week and turn the weekly candles into a bullish engulfing, but I am not holding my breath on that. Still only in the first leg of my long-term FRO position.
With the doji, the weekly pattern has now formed a bullish harami cross pattern. While not much can be made of this pattern on its own, a change in trend could very well be at hand.
FRO could theoretically continue to consolidate at these levels for multiple weeks. A base is being built as the transfer of stock from weak hands to strong hands continue and theres no telling when demand will finally outtake supply. Would prefer to see this break $6.00 next week and turn the weekly candles into a bullish engulfing, but I am not holding my breath on that. Still only in the first leg of my long-term FRO position.
Comment:
Loving the FRO price action today. Achieved a .618 retracement and what could very well be an ABC corrective wave after an acceptable leading diagonal. On top of that we had a hammer on the daily. Expecting a big move in the next few days above $6.00 and then the structure would look like a beautiful micro 1-2-3 and the chances of this being the bottom increase dramatically. (structure + resistance cleared + all of the previous analysis = highest of probabilities)
Comment:
not good price action, but also found out today the stock is going ex-dividend tomorrow. if I were a money manager, why would I do anything but keep a market afloat in a stock I was accumulating just to pay unnecessary taxes on the dividend? tomorrow should be very telling. looking like a textbook low volume retest, really want to see some upside action but continuing consolidation around these levels would not be surprising. tomorrow will be a learning experience to see how this stock reacts after going ex-dividend. really do not want to see this go lower on high volume as that pushes back the bottoming period, but this just showcases why you don't enter a full position at once and at 1/4 for an ultra-longterm position, it will only be emotional trying not devastating.
Comment:
today looks like a textbook low volume window retest. the gap has now been completely closed and it looks like sellers have dried up. really wish i had been more patient as today looked like an absolutely beautiful time to begin a position. whichever operator is maneuvering in this stock... i hope this experience benefits me in the future.
Comment:
not much to add. looking very much like a low volume retest of all-time lows. the fact that there has not been a impulsive move above $6, and my conviction belief that there is a very professional operator accumulating this stock, makes me believe we could very well see new all-time lows, temporarily, to help flush out some more weak hands before we cross through $6 (drop below lows would be known as a spring). While this is not what I want, I am by no means in a full position, and this stock could just as well break above $6.00 in what would confirm to an even higher degree that this stock has bottomed.
Comment:
upward break of the lower trend line, the 50dma, and the previous all-time low/resistance of $5.90. no volume confirmation of this move. major resistance at $6.02. if the uptrend has begun one would expect it to cross that barrier with some heavy volume. If it hits and bounces theres a good chance i will empty a portion of the position to add lower. the lack of a strong reversal means the above ending diagonal is most likely incorrect, and in actuality does not count as an ending diagonal. (unless it breaks above $6.02 with some velocity). still in, observing and planning the next move.
Comment:
always when I start getting fearful... thankfully experience kept me from selling my position yesterday. there were some signs such as the massive accumulation towards the close yesterday that broke above 5.90, but i'll chalk that up to a learning experience on my part. while I should have added right at the open in hindsight, I didnt, but I did add around $6.13 and am now 1/2 into a full position in FRO.
a whole list of bullish events culminated to close the week. if the gap today holds, the daily chart now sports an island bottom reversal. we had a close above the downtrend line. weekly tower bottom candlestick pattern, in addition to the weekly harami cross noted on June 2nd. the monthly candlesticks are on pace to complete a morning star which would be so incredibly bullish its getting my adrenaline going just thinking about it. with that said, experience says to wait until this occurs instead of going gung-ho in anticipation. todays potential breakout move up was on ok volume. not enough to discredit the move, but not a bonafide follow the leader type breakout either.
look for resistance to be met at around $6.30 (100dma), roughly $6.50 (clean round number and around the box breakout counting from $5.35 to $5.90), and then finally at $6.80 which is the 200dma. To my eyes it looks like the supply is dried up and there is now a vacuum. Come Monday if there is another move up I will add and finish my option position, while waiting to enter my full stock position on a break above the 200dma. In my opinion the 200dma is the box kahuna. a legitimate break above that, and this stock is in a bull trend. while mr.market seems to have its own agenda, if this were to happen by the end of the month the most conservative of investors would have an absolutely phenomenal, incredibly reduced risk, position entry. Monthly morning star and above its 200dma... time will tell
a whole list of bullish events culminated to close the week. if the gap today holds, the daily chart now sports an island bottom reversal. we had a close above the downtrend line. weekly tower bottom candlestick pattern, in addition to the weekly harami cross noted on June 2nd. the monthly candlesticks are on pace to complete a morning star which would be so incredibly bullish its getting my adrenaline going just thinking about it. with that said, experience says to wait until this occurs instead of going gung-ho in anticipation. todays potential breakout move up was on ok volume. not enough to discredit the move, but not a bonafide follow the leader type breakout either.
look for resistance to be met at around $6.30 (100dma), roughly $6.50 (clean round number and around the box breakout counting from $5.35 to $5.90), and then finally at $6.80 which is the 200dma. To my eyes it looks like the supply is dried up and there is now a vacuum. Come Monday if there is another move up I will add and finish my option position, while waiting to enter my full stock position on a break above the 200dma. In my opinion the 200dma is the box kahuna. a legitimate break above that, and this stock is in a bull trend. while mr.market seems to have its own agenda, if this were to happen by the end of the month the most conservative of investors would have an absolutely phenomenal, incredibly reduced risk, position entry. Monthly morning star and above its 200dma... time will tell
Comment:
out of FRO this am for a small profit. bad break today on very heavy volume. no news. someone wants out and I am going to follow them while still profitable. “The natural tendency when a stock breaks badly is to sell it. There is a reason--an unknown reason but a good reason; therefore get out.”
Both the exhaustion gap and ending diagonal most often precede strong price reversals. 5/30/2017, next Tuesday (the first trading day after Memorial Day weekend), FRO reports earnings in the pre-market. Ideally a strong up move follows and confirms the end of the downtrend. Will be looking to add the second leg if confirmed Tuesday.