ZSL

OK, one stock pick last night and a horrible one it was. I don't know yet what's going on with Gold and Silver, but ZSL turned out to be a whopper of a loser today. Hopefully you did not buy it today as it gapped and opened below the stop out level-that hopefully was enough to keep you out.

Here's the 3C charts showing accumulation yesterday, click on the chart for a larger view.


10 min 3c


5 min


1 min

All of the charts yesterday lined up and suggested a high probability move up. Here are the charts for today, which unbelievably, show even more accumulation. However, it may seem a bit illogical, but if smart money knows a move to the upside is in the making (because they have accumulated the position and will drive it higher), then it makes sense that they would want to accumulate at lower prices. It also makes sense because the move today broke a strong support level which would lead to a lot of selling, making it easier for them to buy cheap-(more supply than demand=lower prices) and it would bring in the short sellers. Any subsequent move up would cause the short sellers to be squeezed and they'd be forced to cover their positions which would add more fuel to the upside move. In essence this could be a false breakdown, the charts below (today's) seem to fit well with this theory.


10 min today


15min


30 min
Note how all the positive divergences (accumulation) occurred near the close when institutional money trades. All three charts today exhibit this behavior.


5 min today

Finally the 5-min chart above shows a formation that is typical of a bottom and possibly in the beginning stages of a move up. There could be one more intraday shakeout, but I think the probabilities of that are low. If you are in ZSL or if you are not and you can watch the intraday chart, then a higher high , above $32.25 would trigger a probable move to the upside and you'd either hold or jump into the position at that point. Should ZSL make a lower low as demonstrated on the chart above (click on the chart for a larger view), then I would exit the position, either partially if you think it could be a final shakeout or more likely totally out. You can always re-enter if the scenario I laid out above comes to pass.

Based on the 3C charts, which have been very accurate, even calling today's market nearly perfect as it has for nearly everyday the last month, I'd guess we saw a major shakeout/False downside breakout, but that is opinion and you must make your decisions based on the information you have now. Watch the price levels. I WOULD NOT set an intraday stop order, if you will stop out intraday, set an alert and manually stop out. Never show the market maker/Specialist your hand.

Check back later tonight for tomorrows ideas/analysis and read Trade Guild later for further analysis.