Charting Analysis of ELTP, UUP, and the U.S. Dollar Index
The PowerShares DB US Dollar Index Bullish Fund and Elite Pharmaceuticals are examined from a trader's perspective.
Geez, what a punishing day for the bulls. Yet, we still probably have more selling to work our way through before hitting the ultimate bottom. There is some relief though... or at least some hedging. Take a look at Elite Pharmaceuticals, Inc. (OTC:ELTP), and PowerShares DB US Dollar Index Bullish (NYSE:UUP). Either or both may help stave off more near-term losses.
I'd almost given up on Elite Pharmaceuticals, Inc. (OTC:ELTP), but it's managed to get back in my good graces (though not in my portfolio yet) by the virtue of its resiliency this week. What should have been the beginning of a pullback for ELTP last week has been staved off, keeping the stock in the hunt for a breakout.
The last look came on December 15th. At the time, ELTP has caught between a rock (horizontal resistance) and a hard place (rising support). Knowing something had to give sooner or later, I put it on the radar as what was mostly a bullish possibility. As it turns out, Elite Pharmaceuticals shares quietly fell under that support line (finally) last week.
In a vacuum, I might take it all at face value and just chuck the unusable idea. Funny thing though.... Elite Pharmaceuticals, Inc. found support at the very next possible support line that's the one plotted on the chart below. I still contend that a move above resistance will be the key to any breakout effort from ELTP (and we're going to need a lot more volume to make it work), this one just compels me. Set your trade-triggers at $0.12.
I have to confess that I'm probably having a little too much fun with my PowerShares DB US Dollar Index (Bullish) (NYSE:UUP) suggestion from December 17th. It was actually a bullish call on the U.S. dollar at the time, which I caught a ton of flack for (how ridiculous of me to think the sawbuck can actually advance). Well, here we are with the U.S. Dollar Index and UUP both higher by about 2.2% (which is huge for currencies) since December 17th, making money on a trade that went against the grain of public opinion the entire time.
Anyway, the reason I bring it up is not to gloat, but to let you know we're approaching my original target levels. You may recall I used Fibonacci retracement lines to establish those targets. For the PowerShares DB US Dollar Fund, that line is at $23.79. For the U.S. Dollar Index (UDX) itself, it's at 79.80. Just in eye-balling both charts, I think it's clear that the index will get to its target before UUP gets to its target. This leads me to wonder if we should exit the ETF when the index reaches it objective, just in case. That can be your call.
One thing I want to add.... though we're going strong now/today, I still sense we could see one more mild pullback from UUP before striking the final blow and reaching those Fibonacci resistance lines. I make that point simply to caution you against jumping to conclusions and getting out early, or shorting the dollar again on any dip from this point forward. The PowerShares DB US Dollar Fund has dipped a couple of times since mid-December, but ultimately continued higher.
Stay tuned, even if we reach these targets. There's more good trading in store here, but this isn't a great time to be entering any new trades.... we're working on an exit.
I'd almost given up on Elite Pharmaceuticals, Inc. (OTC:ELTP), but it's managed to get back in my good graces (though not in my portfolio yet) by the virtue of its resiliency this week. What should have been the beginning of a pullback for ELTP last week has been staved off, keeping the stock in the hunt for a breakout.
The last look came on December 15th. At the time, ELTP has caught between a rock (horizontal resistance) and a hard place (rising support). Knowing something had to give sooner or later, I put it on the radar as what was mostly a bullish possibility. As it turns out, Elite Pharmaceuticals shares quietly fell under that support line (finally) last week.
In a vacuum, I might take it all at face value and just chuck the unusable idea. Funny thing though.... Elite Pharmaceuticals, Inc. found support at the very next possible support line that's the one plotted on the chart below. I still contend that a move above resistance will be the key to any breakout effort from ELTP (and we're going to need a lot more volume to make it work), this one just compels me. Set your trade-triggers at $0.12.
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Anyway, the reason I bring it up is not to gloat, but to let you know we're approaching my original target levels. You may recall I used Fibonacci retracement lines to establish those targets. For the PowerShares DB US Dollar Fund, that line is at $23.79. For the U.S. Dollar Index (UDX) itself, it's at 79.80. Just in eye-balling both charts, I think it's clear that the index will get to its target before UUP gets to its target. This leads me to wonder if we should exit the ETF when the index reaches it objective, just in case. That can be your call.
One thing I want to add.... though we're going strong now/today, I still sense we could see one more mild pullback from UUP before striking the final blow and reaching those Fibonacci resistance lines. I make that point simply to caution you against jumping to conclusions and getting out early, or shorting the dollar again on any dip from this point forward. The PowerShares DB US Dollar Fund has dipped a couple of times since mid-December, but ultimately continued higher.
Stay tuned, even if we reach these targets. There's more good trading in store here, but this isn't a great time to be entering any new trades.... we're working on an exit.
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James E. Brumley is a paid contributor of the SmallCap Network. James E. Brumley's personal holdings should be disclosed above. You can also view SmallCap Network's complete disclaimer and disclosure.
