Con-Way Stock at a Fork in the Road

• Posted by Greg Harmon
• on November 13th, 2014

Often times the signals provided by different types of technical analysis can be in conflict with each other. I am sure this is one reason that many think that technicals are a bunch of hogwash. But often those conflicts can be resolved with a little bit of a deeper review. A good example of this is looking at seasonality that suggests a move higher while the stock is falling. This can be resolved by an understanding of timeframe. But those conflicts can also be a signal that something is about to happen or change.

There is a conflict in the chart of Con-Way, $CNW, at the moment. Is it a signal of a change or just a timeframe issue?

The chart above shows that Con-Way started to move up off of a higher low October 30th. As it moved up the RSI started higher as well. When it broke above the October 28th high it triggered a bearish Bat harmonic, with a Potential Reversal Zone at 52. Good upside potential.

But since breaking that high, the stock has done nothing but move sideways and is now printing a doji, signaling indecision, at the 50 day SMA. And the RSI is flattening without a move into the bullish zone over 60. Signs of a rollover?

This type of conflict presents opportunity for a trader. A continuation higher, over the 50 day SMA, triggers a long trade looking for that 52 level, and using a break back under the 50 day SMA as a stop loss. Conversely a move under 46 could trigger a short trade using the 50 day SMA as a stop loss looking for a retracement to the low at ‘C’. What do you see?

Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades.

---

 

Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through October 2014 Expiry and sign up here

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus