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Joseph Brychek
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I am a self-taught technical trader that uses Candlestick Charts, Trendlines, Chart Patterns, Fibonacci Analysis and Elliott Wave theory as types of analysis that form the basis for my investment decisions after finding companies with excellent fundamentals.
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  • Potbelly (PBPB) 2/12/2015 - Time To Buy A Sandwich?

    DSC00555For those members that have been around for a while, you know that I dumped my Potbelly (NASDAQ:PBPB) shares a little over a year ago now when I realized the trade wasn't working out as I had anticipated. My last update on PBPB was here - "PBPB 1/24/2014 - Time to Move On".

    For the unaware, PBPB make gourmet toasted sandwiches. They were actually one of the first places to come out with the toasted sandwich, and then there were followers....I love their sandwich called a "wreck" which has several different types of meat, as well as their shakes.

    For my birthday last week, where did I tell my wife I wanted to eat? You guessed it - Potbelly. Yeah, I'm also going out this weekend for a nice steak, but that is just how much I like their sandwiches.

    So as I was getting ready to shut down tonight and go watch some TV (Shark Tank on CNBC), something inside my head said to look at Potbelly's chart since it had been a I did. And boy am I glad I did because its chart is looking like it formed its bottom at the $10.91 mark and in the process looks like it has also developed into a Leading Diagonal Wave Pattern. This is a 2 year daily candlestick chart for PBPB.

    (click to enlarge)

    A Leading Diagonal Wave Pattern is a pattern that I identified for Facebook before its July 2013 earnings pop, which has lead me to tremendous gains. A Leading Diagonal Wave Pattern looks similar to a stair-step pattern. Facebook's article can be found here - "FB 7/9/2013 - The Bulls Are Lurking".

    I will be watching PBPB's price and volume action over the next couple of days to determine if I am going to throw a few dollars at this pattern I see developing.

    Based on the above, I would expect that PBPB retraces back to the gray shaded box area before its earnings report next week. PBPB reports their earnings on February 17, 2015 after the market close. That gives me 3 full trading days for the pullback to occur as anticipated. If it does, this would be my opportunity to play the upcoming earnings report. I normally do not like to play many earnings reports just to play them, but when I see potential patterns shaping up that could lead to nice profits, it requires some monitoring over the next day or two...

    What I also like about the above chart is the capitulation day (selling volume spike) on the day of PBPB's potential low of $10.91 - all long downtrends must end with a day of capitulation. This is something to definitely keep in mind for all other stocks, especially when you are trying to catch the proverbial knife as it falls....

    And the last thing about the above chart, when PBPB had their IPO in November 2013, its IPO price was at the "high end of the range" which was $14...that means the "low end of the range" must have been somewhere around $10 or $11, where PBPB bottomed out. Keep an eye on this one over the next couple of days....

    Tags: PBPB
    Feb 12 9:23 AM | Link | 1 Comment
  • Lower Priced Subscription Plans Offered!

    I've lowered my subscription plans for the month of February 2015. If you have ever wanted to learn technical analysis and join a site where we use Fibonacci Tools, Trendlines, Moving Average and even Elliott Waves, then consider joining before the sale ends!

    Jan 29 10:28 PM | Link | Comment!
  • Nasdaq Composite & NYSE Bullish % Index

    The NYSE Bullish % Index still has a bearish reading of 64.98 (under 70 is considered bearish), but that reading is almost 2 points higher than the previous time I reported on it last week when I believe it was just over 63.

    The Nasdaq Composite in this next 1 year chart looks like it could be time to take a rest - the decreasing buying volume is creating a bearish divergence. A bearish divergence is created when the share price (or index's value in this case) is rising and the buying volume is decreasing. This bearish divergence typically means that a short-term top is either approaching or already here.

    (click to enlarge)

    I sketched out a possible Motive Wave Pattern with the blue trendlines that I see on the Nasdaq's above chart (Waves 1-5). As I noted above, there is decreasing buying volume that has created a bearish price volume divergence over the last 2 weeks. Prior to that, there was some heavy selling going on, which is typical in a Wave 4. These are 2 characteristics that fit a Motive Wave's Wave 4 and Wave 5 personality to the tee.

    So if a Motive Wave has indeed completed, then some sort of corrective pattern is next. That is why I highlighted the previous downtrend on the Nasdaq's chart. There is one rule of Elliott Wave's that I have not discussed much lately, and that is the rule of alternation. This typically means that if the previous correction was a sharp drop-off type of correction (like a Zig-Zag Wave Pattern), then the next correction will most likely be a flatter type of correction (like a Flat Wave Pattern). Flat Wave Patterns typically will not correct as deep as a Zig-Zag Wave Pattern does.

    That indicates to me that the market will appear to be going sideways for the next couple of weeks. That is one of the reasons that I have been raising some cash lately and selling various stocks to lock in gains. I need to have some more cash available in case a pullback does materialize over the next couple of weeks. You gots to have cash for the crash........(in this case, I wouldn't necessarily call it a "crash", but it sounds cool and rhymes).

    Now, it is possible that Wave 5 continues its uptrend in the near term. Maybe in this case Wave 5 emulates Wave 3 instead of Wave 1. There are times where there are 2 extended waves in an uptrend. That is why I am still approximately 75% long in my portfolio with 25% cash.

    When this correction ends at some point and the Nasdaq starts its next uptrend, it is very important to me that the Nasdaq has a couple of buying days with above average volume. It gives me an uneasy feeling having the bearish divergence take place. I would like a more positive confirmation about the index's direction.

    Aug 26 6:06 PM | Link | Comment!
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