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NOL: Downtrend.

Thursday, July 1, 2010

After hitting a high of $2.35 on 15 April, NOL was in a downtrend which was broken on 16 Jun on relatively high volume. Price hit a high of $2.13 on 21 Jun while forming an inverted white hammer, a reversal signal. This reversal signal was promptly confirmed in the next session. Forming a high of $2.13 on 21 Jun created a bearish picture because it was a lower high compared to the high of 13 May at $2.18.  This was a warning sign.

The MACD histogram turned red on 22 Jun while the RSI and OBV turned down the same day. Price has broken through various supports since then.  Price is currently resisted by the merged 20d and 100d MAs at $1.97.  With the 50dMA declining just above these merged MAs, it would be a difficult resistance to overcome without a buy up on massive volume.  Any upside could be resisted by the 50dMA just a few cents higher at $2.00. It seems that there are more sellers too if we notice how volume has increased as price declined since 21 Jun.  This is confirmed by the lower highs on the OBV which suggests that distribution activity has increased.

The MACD has formed a bearish crossover with the signal line and a retest of the flattening 200dMA which is currently at $1.83 seems likely.  As a support, the 200dMA was breached on three consecutive days in late May. So, this makes it somewhat unreliable and it is, therefore, a very important support to watch now.  If it manages to hold up, we would have a higher low formed.  A symmetrical triangle could then be in the works.  If the 200dMA support breaks, we could see the previous low of $1.75 tested.

Given the bearish technicals, I would sell at resistance at $1.97 if I have the chance to do so. If luck is on my side, I might even be able to sell at $2.00 on a possible whipsaw. Prices do not go down in a straight line and there could be little bumps up along the way.  So, a retest of the 100dMA as resistance again is possible. Of course, it might not be at $1.97 then. We want to sell at resistance and buy at supports.  Use the prevailing trend as a guide. Good luck.


Dou said...

NOL going back to $1.97 in short term...not easy.

Good luck!! :P

AK71 said...

Hi Dou,

The probability exists. ;)

I am not vested. I am doing this TA at the request of a donor. ;-p

Noobz said...

hmm the chart is depressing. well lucky now WC mood.. interest may come back after july 11, besides earning season ard the corner should got come chance to see 2.07 level

AK71 said...

Hi Noobz,

Personally, I think many would be selling if it even hits $1.97 or $2.00. Multiple overhead MAs usually means strong resistance but we can never be too sure. $2.07? Crossing fingers. ;)

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