MalanoMan

UPL: A Stock of Two Tales

NASDAQ:UPL   ULTRA PETROLEUM CORP
First of all I want to preface this idea by saying that this is my first ever published idea. Please excuse me for the lack of traditional indicators and proper terminology. I like to generate my own ideas based on the Tom Demark indicator and trading volumes.


In this image of the daily chart you can see that the Tom Demark indicator that I have coded has signaled a "buy" as indicated by the red 9 and green arrow above yesterday's candle. Usually at the bottom of these downtrends, you'll sometimes see a buy signal appear, but it the trend may not reverse for a few more days. According to the TD             indicator, if the price does not surpass the high of the previous day, a short count begins. We saw that happen today. The daily candle has a red 1 on it because today's trading range was completely inside of yesterday's trading range. In order to shake this short count, we need to see the price surpass the high of the red 9 candle. The possibility of this occurring is neither good or bad. The volume of today's trading session was relatively low, which may indicate that the volume of selling is decreasing, giving the opportunity for bulls to come in and change the price trend. If you look at the overall volume trend, we've been observing increasing volumes, which indicates that buy targets are being met and investors are beginning to open long positions. ( I wish I had a chart of UPL             longs!)

Come Monday, if we see the price dip below the close of today's price, this will initiate a red 2 on the daily count, indicating a sell signal. If the price moves above the high of the previous 9 candle (which appears to be $3.39) a green long count will begin.

With that considered, we should now take a look at the overall trend, as shown by the chart below.


Clearly, you can see that a red short count has begun on the weekly chart. The red 2 indicates a sell signal. Now if you take into consideration that the price of natural gas             is dropping (UPL's main product) any logical person would consider selling this stock if they were planning to hold it long term.

But consider this: If you count 9 bars backwards on the weekly, that puts you at the 1 count, right after that last 9 short count, and therefore, we would have a 9 this week. This idea completely throws away the traditional TD             ideology, but it may be convincing that the bottom is around the corner.

With all of that said, I am neither long nor short. The long term trend here is clearly bearish , but there are indicators telling us that a bottom is near. If you're looking for a short term trade, 5 - 10 days, wait for a trend reversal on the daily chart . If you're looking for a long term investment, then I wish you the best of luck investing in this very risky area.
Comment: You could see from the price action yesterday that the downtrend is very much in tact and will continue for some time. The daily chart tells us to short and the weekly chart tells us to short.
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