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Observation Update

Commentary

As we head into the 4th quarter for 2016, I want to get it started with a few charts from the watchlist.  One in particular is NAII, which is new to the list this week.  NAII had an impressive run earlier this year, but since mid-April had been trending down until recently.  With earnings acting as a catalyst, NAII is now trading near 13.25, up from 10 just two weeks ago.  Many traders would look at NAII and say it's extended or is likely to not have much more room to run.

When I see NAII, I see an opportunity that could be very rewarding.  In the short-run, NAII is likely to consolidate the two-week runup before making a move higher.  The opportunity that I see is based on the monthly chart.  Below you'll see that NAII has made a large initial move for the month of September.  You'll also notice the length of the base being presented goes back to 2004.  When you take the technical strength of the chart and pair it with the fundamentals, you have the potential for a rewarding trade.   Earnings last quarter were up 247% and sales were up 58%.  The current PE is currently resting at 10.  With NAII, you have value and momentum which can be a very powerful combination.  Always remember that fundamentals help us sort through the pack, but it's always the technical price pattern that we trade.  Below is the monthly and daily charts for NAII.

Watchlist

Below is a select few from the watchlist to keep an eye on for possible price expansion. Presently the portfolio is almost fully invested, so if more than one or two breakouts occur then a decision will be made with regards to the silver position.  

Wish everyone the best this week and lets see if we can keep heading in the right direction.

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