AVL (Avalon Advanced Materials) and NASDAQ Charts, Buying QID

 

The chart of AVL, Avalon Advanced Materials, is shown below:

This type of pattern, a large rally followed by a 50% retracement creating a sideways triangle shape, often resolves upward.

The green downtrend seems broken, and above $0.225 we'd say it's a reasonable speculative buy.

We hold an existing position in AVL at an average of $0.16 purchased in April of this year, not previously diarized herein. 


While the above chart looks bullish for one stock, the same can't be said for equities in general.

The NASDAQ has made new highs this month however other major indexes have not.  This is a technical "non-confirmation" and as we can see on the NASDAQ two-year chart below there are possible resistive trends immediately above its current level:

Looking more closely, we also see a short-term and longer-term "rising wedge" pattern that looks due to break.  If so, the implications are very bearish:

We may add to our general market short positions via a buy-stop on QID at $25.20

QID closed Friday at $24.43

If that buy is triggered, we'll close and reassess the position should it close below $22.60 in an attempt to limit risk to roughly 10% from our buy-stop level. 

As previously noted, we have other open general-market short positions which we'll close should the DJIA close above 18850.


It's worth considering that the National Association Of Investment Advisors recently polled as being 100% invested:

"NAAIM’s membership is comprised of Registered Investment Advisors and their Investment Advisor Representatives associated with small regional firms to large national firms with over $1Billion of assets under management, including hedge fund managers, mutual fund companies and a variety of other firms that provide professional services to RIAs."

We believe it's reasonable to say that institutional money is all-in on equities. 

Bulls make the argument that retail investors are due to chase the market far higher.  Given the liquidity and debt situations in the average household, along with vivid memories of the severe stock and housing market crashes within the past decade, we doubt a speculative mania fueled by retail investors is likely any time soon.




 

 

 

 

 



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