URRE Update (Long Core Equity Position)

The URRE calls were exited at the perfect time, but the URRE long equity positions were started because draw-down was apparent, there was just no way of knowing how much. What was also apparent is the fact that URRE is not like the majority of stocks that are just drafting the market, like several others it has legs of its own and will likely be a longer term long position that I'd like to keep in place as par of my portfolio structure.

When I'm leaning bearish in portfolio management, I'm never 100% short (or long), I may have a percentage in cash or "flight to safety" assets, perhaps some income producing high yield defensive dividend stocks or trusts like BPT have served me well in the past.

 I believe this may be what Carl Icahn is trying to do with AAPL (considering his plans and the timing) as Icahn must suspect the same thing as we do for the market. AAPL is a large enough stock that it could handle a large flood of institutional "long only" funds seeking to find positions that are not likely to see a lot more downside as AAPL  has already lost -45% in less than a year.

If Icahn is doing what I think, then it's genius, he would turn AAPL in to a flight to safety asset rather than the former momentum / risk asset it was just like the transition in MSFT from a full-on risk asset or momentum stock to a mainstay (I think MSFT pre and post 2000 is the blueprint for Icahn's plans) creating actual demand for a stock in a declining market. Of course he needs to get the larger dividend through AAPL's board, this is the income that would attract the large number of 401k style, "Long Only funds".

 I also like some longs that are positions that have their own legs and can rally despite the market being down, so I don't have 100% of a portfolio in one direction or "all of my eggs in one basket". URRE seems like one of those stocks.

I haven't called out URRE as a new long position or an add to position yet because the signals haven't been there, but I also have held the positions as I look forward.

 URRE 60 min 3C chart shows the distribution on the first parabolic move higher, note how parabolic moves rarely end well and URRE saw distribution at the top followed by price decline and it hasn't put in any positive divergences until just now as we have the weakest form, a relative positive and this is common as a first sign of accumulation. Although relative divergences are the weakest form, the fact that this is large and a 60 min chart means it is stronger than a typical relative positive.

The 3 min chart shows what I was just talking about, one of those "accumulation" events as URRE finds a range which is the perfect place to look for such a divergence.

This is a much stronger divergence type, leading.

 This is a daily chart of URRE, the colored candles are like this because I have this chart set up to follow the "Clear Method" swing trading (price based) analysis.

Note the triangle right before the considerable upside move, this wouldn't be unusual for a lower priced stock as they tend to track the expectations of technical analysis better than most assets do. Price has broken out of the triangle and returned to the apex, as of now there's no head fake move in URRE, but I suspect it's highly probable that we see one and I'll show you why. A head fake move on the downside would likely be the best entry you'll get in URRE as a long, I'll show you where it's most likely to occur.

 A wider view of the daily chart shows a large inverted H&S base or "inverse" H&S base.

We'd have a left shoulder, a head and the first half of a right shoulder which is often one of about 3 areas I'd buy in this price pattern, the others are too dangerous and we have a slanting neckline. One thing you'll find is real life price patterns never look like the cherry picked text book price patterns, that doesn't make them any less desirable.

The price pattern implied upside target for URRE is $9.60 on the conservative side and patient side, now you can see why I've been fine with the core long positions in place.

I'm using a 50-day moving average on a 2 hour price chart  and my Custom award winning (my first award of about 6) Trend Channel indicator to help out here as well.

If you click on the chart you can get a closer view. Do you know where the current breakout level is using the 50-bar moving average as the technical breakout level?

$2.92

The Trend Channel has held the entire short trend on this timeframe with no exceptions, do you know what the stop-out that shows a change in character of over two standard deviations beyond the current character of the asset?  

$2.92

Recently there was a Trend Channel "Channel Buster" (which is another one of our market concepts)
in the yellow box. The Channel Buster did not change the nature of the short trade or stop it out, but according to our market concept for Channel Busters, the move is like a head fake and more specifically like a failed breakout, the move below the channel causes shorts to jump in on the change in character to the downside and causes longs to capitulate, so for any effective Channel Buster, we need to see volume (shorts entering and longs seling or being stopped out).

Volume is obvious at the Channel Busters.

Typically what a Channel Buster does is breaks a channel (trend, envelope, Bollinger Bands, my Trend Channel, etc.) and that break which is a change in character creates volume which Wall St. can use to enter or exit new or existing positions. Then price moves the EXACT OPPOSITE way of the channel break in a very short time and with a lot of momentum, THIS IS WHY A CHANNEL BUSTER IS A TYPE OF HEAD FAKE MOVE.

In this case with the channel broken on the lower end, many shorts will take gains off the table, longs will capitulate and sell and this clears out all of the weak hands and opens the door to smart money entries as there's a lot of supply. Then as price moves up all the new shorts are taken out in a squeeze sending prices higher, the revenge traders (longs here) that were stopped out re-enter URRE long because of their ego, most traders want to make their money back from a loss in the same stock they lost the money in; it has to do with being right and this is why there's a popular rhetorical market question,

 "Do you want to be right or make money?"

 Because the two concepts do not always lead to the same outcome, for instance there may be a much better trade to allocate those funds too, but humans generally want to be right and that means making the money back in the same asset you lost it in and often at increased risks rather than in a new trade that has a better set up, probabilities and less risk. 

Finally the snowball effect kicks in and sends price to the opposite end of the channel very quickly.

What I find interesting is the stops in the Trend Channel and 50 day moving averages, for a long position, the psychological whole number area of $3 will set off numerous limit/long orders as well as short stop losses (conceptually). Thus a break above $3.00 creates momentum and makes URRE look like a much stronger trade  as well as following the "Channel Buster Concept" and moving to the top of the channel or above on the event that is the initial break below the channel.

I'm not 100% committed to NEW or Add-to positions in URRE, but I do have long equity positions in place and would not be opposed to adding to them with a few stronger 3C signals.

In other words, URRE is finally coming back to life.