point and figure chart trading strategy returns

dannbsp;DELAFIELD, Wis. (Stockpickr) -- The old-hat market is again below heavy marketing pressure today, with the Dow Jones Industrial Average soured by 139 points, the Sdanamp;P 500 polish by 13 points and the tech-heavy NASDAQ trending lower by 32 points.

dangt;dangt;3 Stocks Breakage Out on Brobdingnagian Volume

Despite the dilute action in the markets, there's i aggroup of stocks that traders continue to come after with force. That group is what I like to anticipate "horrible charts." These oversold, familiar-down stocks with inadequate-looking technicals are where all the money is being made ethical now Eastern Samoa large traders chase this group look for quick rebound moves. This is a theme and pattern in the markets that I think is going to continue to exhaust, since there are so many candidates for this graph pattern.

Take, for representative, the run we've seen in shipping player NewLead Holdings (NEWL) over the last few days. You'll be hard-pressed to find a worse-look chart and so NEWL over the last six months. Things got and then bad for this company that last Thursday it announced a 1-for-50 reverse split for its common shares so that the company could maintain its compliance with being listed on the NASDAQ. Shares of NEWL are soaring higher today by 80% in a violent tape -- and the stock is up much more that when you consider that its post-split low was 39 cents per share.

dangt;dangt;5 Rocket Stocks At the ready for Blastoff

Horrifying charts are live for various reasons. In some of these name calling, the short-Peter Sellers have overstayed their welcome and pushed these stocks down to absurd levels. Then when the bulls start buying, the smart short-sellers are covering quickly, causation large spikes higher. To boot, many of these stocks take up entered extremely oversold territory, and in that location isn't anyone left volitional to betray these stocks down at their depressed levels.

Many traders are unwilling to go penny-pinching these ugly charts, but that's a impolitic way to approach the markets since this theme is trending and temporary in a tough market where the usual sphere trends aren't acting out. This game is all some finding trends and exploiting what's working right in front of you, flat if it's something you have avoided in the past. I like to think of IT arsenic playing in the sandbox that everyone else on Fence in Street is playing in. If cypher is in your sandpile, it's likely time to find another one.

One beaten-down and extremely oversold that's not going down now is Plug Index (Stopper) - Amaze Plug Power Inc. Report.

As I write this, shares of PLUG are trending modestly higher by 1.4% to around $4.50 per share. Shares of Plug Power have been slammed lower berth by the sellers over the last three months, with shares down sharp from its 52-calendar week screaky of $11.72 a apportion to its past low of $3.62 a plowshare. That's a massive slide lower and Plug Power didn't help the cause after the party recently announced some large incidental offerings.

Plug Power has a food market cap of $613 million and an enterprise economic value of $514 million. This origin currently trades at a premium rating, with a forward price-to-earnings of 227. Its estimated outgrowth rate for this year is 67.6%, and for next year information technology's pegged at 118.2%. This is a cash-rich accompany, sine the total cash set down on its balance mainsheet is $63.23 million and the total debt is simply $3.61 meg

Recently, Cowen upgraded shares of Plug Power to exceed from market do. The firm mentioned that IT took a tour of the caller's factories and saw a top steady of activity for its GenKey fuel cell product. The firm also said that strong year-to-date bookings should lead to fourth-after part profitability, and Plug Office's hefty cash attitude should enable information technology to develop new products, expatiate into Asia and support its expansion into the atomic number 1 generation market. Cowen cut its price target on PLUG to $6 from $7.50 based happening higher expenses and new shares issues by the company.

TheStreet Recommends

From a technical perspective, shares of Stopper Power has been downtrending badly over the last three months, with shares fast-flying lower from its 52-week high of $11.72 to its recent low of $3.62 a share. That said, shares of PLUG wealthy person for in real time stopped its downtrend once the stock hit is modest of $3.62 a share, which corresponds with a previous low backrest in February around $3.36 a share. This bounce off that $3.62 low could beryllium signaling a behind is sure shares of PLUG in the near-term and this stock is straightaway quickly mobile inside grasp of triggering a star breakout trade.

Traders should look for long-unfair trades in PLUG if it manages to snap off verboten above whatsoever key near-terminus overhead resistance levels at $4.55 to $5 a dea with high-stepped mass. Look for volume on that move that hits near or higher up its threesome-month moderate action of 48.10 million shares. If that breakout launches soon, then PLUG will put capable re-test or possibly take out its next John R. Major viewgraph resistance level at its 50-day moving average of $5.93 a share. Any towering-mass move in a higher place $5.93 will then give PLUG a chance to mark down $7 a share.

Traders seat look to buy shares of PLUG off weakness as long as information technology's trending above some near-term support at around $4 a share. One buttocks also but buy PLUG off strength once it takes out those breakout levels with volume and then simply use a cease that sits a comfortable percentage point from your entry.

This is a heavily shorted stock, since the modern squat involvement as a percentage of the float for Plug Power is sits at around 20%. Those underdrawers have banked pregnant coin over the last three months, but I have a sneaking feeling that they've started to cover some of their trades and are now flipping to the polysyllabic side of meat.

The bottom line: Frightful charts are working in this market, and shares of Plug Power currently have all the characteristic of a atrocious graph. A whole trading opportunity could be developing for this horrible chart shortly and there are already plenty of short-term-Sellers encumbered in this name. If we go steady further strength for shares of PLUG in the near-term, and then this horrible graph could turn into a great trade if it breaks out above the key resistance levels I highlighted along the graph.

-- Scrivened by Roberto Pedone in Delafield, Wis.

Attendant LINKS:

dangt;dangt;3 Big Stocks to Business deal (operating theater Non)

dangt;dangt;5 Stocks Prepare to Soar on Bullish Net profit

dangt;dangt;Sell These 5 Toxic Stocks Before It's Excessively Late

Follow Stockpickr on Chirrup and turn a fan happening Facebook.

At the time of publishing, author had no positions in stocks mentioned. Roberto Pedone, based out of Delafield, Wis., is an unconditional trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto premeditated international business at the Milwaukee School of Engineering, and atomic number 2 spent a year oversea perusing business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can comply Pedone happening Twitter at www.twitter.com/zerosum24 or @zerosum24.