Bearish Engulfing Opportunity in Altera ALTR

Aug 25, 2014: 1:28 PM CST

Altera (ALTR) showed up on two of my stock scans this morning and I wanted to share the chart both as an educational resource and a potential trading opportunity.

Let’s see the chart and discover why this stock appeared on two separate scans:

First, Altera (ALTR) appeared on my morning “Consecutive Closes” scan as the stock that has closed the MOST times to the upside in the S&P 500.

To be specific, ALTR has closed higher 11 days in a row.

I’ve been including daily results of this scan in the Daily Membership report (it provides aggressive yet short-term trading opportunities).

The 11-day consecutive rally has taken price from the lower Keltner Channel ($33.00 level) to the current location above the upper Keltner Channel ($35.00 per share).

There’s another reason we’re interested in this stock – see if you can discover it before I reveal the answer:

At the moment, Altera is developing a Bearish Engulfing intraday candle where today’s open gapped up into the $35.00 per share level and price traded lower all day so far.

As a result, today’s candle is engulfing or trading beyond yesterday’s high and low.

This is a traditional candle pattern that often appears at turning points or short-term reversals in price.

While it’s fun to scan for bearish engulfing candles, we can’t just take them in isolation.  Place the candle pattern in context of resistance levels, divergences, trend strength or weakness, etc.

Our three factors that argue for a potential short-term reversal – and thus bearish candidate – include:

  • Eleven days in a row to the upside (into resistance)
  • A Bearish Engulfing Candle Pattern
  • A “poke” and close above the daily Keltner Channel

While not guaranteed, odds do favor a stall/pause into current levels as opposed to an alternate thesis breakthrough continuation higher.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

2 Comments

2 Responses to “Bearish Engulfing Opportunity in Altera ALTR”

  1. Mulham Masih Says:

    The chart was really very helpful.

  2. Khurana Says:

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