Stocks are flying off the shelves lately and shares of
have clearly seen a lot of activity judging from the volume expansion that has occurred over the past two weeks. Over that time, JOEZ moved to $3.60 from $2.80 and back to a low of $2.60 in a wild ride to say the least. Is this just volatility prior to another ramp higher, or is Joe's Jeans just full of holes?
To try and answer that, we'll zip through a few charts and highlight the key technical ideas.
On a long-term time frame, JOEZ exhibits doubly
. The confirmations were created with large volume expansions and thus, on this time frame, what's there not to like?
If we take the time to pull the chart back even further to try and get a sense of upside potential, we see that JOEZ has been mired in a down trending channel for some 14 years. That represents a serious overhead resistance problem. The potential good thing about this is that a breakout of this channel will be a huge event.
The problem is that it still is within the channel and given the run it has had it may remain there for a while longer.
Switching to the weekly chart, the primary focus I have is on the nature of the advance on this time frame.
It is suspect bullish and that usually means that prices will retreat and retest at some point. A positive development is volume at the top on the weekly chart but the candle it was recorded in is a negative inverse hammer. Again, more good with bad and you can combine both of these items with the fact that the uptrend line remains intact. The problem with that -- I know you were expecting I would have a problem with that -- is that when we move to the daily chart it suggests that a further pullback is possible and that this uptrend line is primed for a break. That break also would fit with the need to rectify the suspect bullish trend that is in place.
Speaking of the daily chart, here's the short-term time frame.
On this time frame, we see a broken uptrend line that was broken on a huge volume gap down. Unlike the weekly chart, this chart exhibits volume off the top and that is usually problematic.
Resistance is heavy now at the gap and I don't expect JOEZ to trade above that area on this time frame.
Therefore, if you are long, it's best to look to book all or some of those gains in the $3 vicinity assuming JOEZ allows for that. The longer-term trade is to patiently wait to see how JOEZ trades lower and in particular how it behaves as it comes back to rectify the suspect bullish trend.
Until next time, keep trading the charts!
At the time of publication, Little had no position in the stock mentioned, though positions can change at any time.
L.A. Little, author, professional trader and money manager, writes daily on
, a free educational site for traders and investors. He has been featured in numerous publications and is the author of
His background includes degrees in philosophy, computer science, computer information systems and telecommunications. With a trading philosophy centered on capital protection first and the accumulation of consistent gains over time, L.A. espouses a simplistic technical approach to trading the markets that is a throwback to the days of past. With a focus on swing points and the qualification of trends, L.A. provides a breath of fresh air to an otherwise crowded room of derivative indicators with the emphasis on technical minutiae.