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Trade Plan: Short PWE

6. January 2009• Commodities and mining, • Stocks, • TradingPhantasmix Tags: , , , , , , , ,  Comments

Though I dislike trading oil and natural gas, PennWest seems like a fairly low risk short trade. TSX ticker is PWT, but I prefer NYSE-listed (PWE: 19.51 -0.76%).

Trade: short PWE
Entry: today’s close or on morning pop
Target: $12.15, once reached, I may move the stop to this level and let it go to maybe $11
Stop: $0.50 above entry
Risk: $0.50
Potential profit: $1.30-$1.80

Why:
  • Barely touched the 50dma, but couldn’t break above it, even on fairly strong volume
  • Bumping against strong resistance at just under $14
  • Unfilled recent gap up from $12.15
  • RSI(3) – short term – is at an extremely overbought reading, 96
  • Stochastics also showing it’s overbought

I’m hoping for a quick and simple trade. The stop is tight as oil may take the stock above resistance in a flash.

Wouldn’t mind buying this back for its insane yield but not yet.

Click charts to enlarge
pwe

pwe2

 


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