If Friday's bearish market action proves nothing else, it at least proves we can still take nothing for granted.... that we can have no blind faith in stocks, collectively, or individually. That doesn't we can't trade them though. It just means the setups have to be rock solid. Enter Gastar Exploration Limited (AMEX:GST), China Shen Zhou Mining & Resources Inc. (AMEX:SHZ), and NuPathe Inc. (NASDAQ:PATH). Charts of all have dropped technical hints of late that suggest something reliable - even if short term - may be brewing for traders. Take a look.
Actually, let's begin with the success story first - China Shen Zhou Mining & Resources Inc. This is a name I've been talking about bullishly for a while, waiting for it to clear the 100-day moving average line after several tests of it over the past two weeks. It finally happened on Thursday. After building up a head of steam for three weeks, SHZ was flung past the 100-day average yesterday, fully snapping a losing streak and jump-starting a bullish one. Take it all at face value.
SHZ is a metal's miner in China. It's difficult to say whether the recent rebound from this chart stems from heightened activity for the company, or just the perception that the nation state's new stimulus will eventually mean greater demand for metals (demand that may not actually materialize). It doesn't matter though. The masses are starting to see China Shen Zhou Mining & Resources in a bullish light, and that's going to mean at least a few days' worth of bullish traction.
With the China Shen Zhou Mining & Resources Inc. move underway, we can now turn our attention to two more setups that look like they're going to pan out the same way, though neither is off and running just yet.
For NuPathe Inc., there are a couple of things going on, though the biggest is the pressure the stock is putting on the combined 100-day and 200-day moving average lines as a ceiling at $3.52. The 200-day line has been a biggie for PATH of late, serving as a floor for much of October, and then serving as a ceiling since late November. As such, it's not surprising to see the chart stall here and now. But, the dance isn't over yet. Until and unless shares move back under the 20-day and 50-day lines around $3.19, it's worth waiting to see if it breaks above the resistance $3.52. If it does, look out above.
PATH is a biotech developer with a small, focused pipeline. NP201 is in preclinical development as a treatment for Parkinson's disease, and NP202 is in preclinical development as a therapy for schizophrenia and bipolar disorder. It's also got Zecuity/Zelrix - a migraine treatment - waiting for an FDA decision right now, which is clearly the first drug that could bear revenue for NuPathe. We should get the yay or nay on January 17th.
As for Gastar Exploration Limited, we have to take a step back and look at a little more chart to get a bead on it. See below. Though GST has made a higher low since the reversal effort from early November, it's yet to clear a nagging resistance level at $1.13. It is getting close though, and once again with the most recent bullish leg of the bigger-picture reversal we're seeing bullish volume swell up. The bulls want to stage a jailbreak - they just need one more good nudge. A move above $1.13 should do the trick.
GST is an independent oil and gas explorer. The last couple of quarters have looked miserable for the company, as Gastar Exploration Limited was forced to book huge one-time expenses. But, production is starting to measurably ramp up, particularly at Marcellus. Just don't get married to the stock, since this is mostly a reversion-to-the-mean trade that would carry it back to somewhere around the 200-day moving average line, currently at $1.82.