Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

HOW TO RECOGNIZE A TRADING BOTTOM

|Includes: GNC Holdings, Inc. (GNC), NSRGY, OMER, UGLD

I have been engaged in discussion with SA readers on several sites discussing how one recognizes a TRADING BOTTOM. The assumption seems to have been that it is IMPOSSIBLE to recognize a trading bottom. My view is that it is NOT IMPOSSIBLE, if you have the right tool.

I am watching several stocks for signs of a TRADING BOTTOM: FSLR and NVDA to be exact. Neither has given a trading bottom. We are SHORT both stocks. But one stock did give a recent TRADING BOTTOM, so I will use it as an example.

I'm sure this pleases my friend Cristiano at Integer Investments, who has been LONG the stock in question, against my recommendations.

Let's look at a picture of the stock in question, GNC HOLDINGS.

I think the picture says it all. When PROP1 flips from the SELLZONE to the BUYZONE, generally this is a trading bottom. Generally I write, because this is not absolutely true -- FALSE BOTTOMS have been known. But a PROP1 conversion is certainly preferable to a GUY FEELING or a simple surmise (hopium?) based on valuation models.

In contrast, FSLR IS NOT BOTTOMING.

PROP1 (bottom pane) shows very clearly that FSLR is still BEARISH, is still in the PROP1 SELLZONE. In addition, our COUNT indicator (third from bottom) is just now turning down -- in this weekly chart. This means FSLR is going lower. Note the second pane from the top, what I call TREND SHAPE: FSLR is making lower lows and lower highs. When a stock bottoms, the trend will break resistance and make a new high. That is the first sign of a trading bottom. In the subsequent pullback, the stock must make a bottom higher than the last bottom -- a Higher Low. This is the second sign of a trading bottom. When PROP1 breaks up into the BUYZONE (-7 or above) it will be time to close our SHORT position at the very least. That has not happened yet.

The market bounced back somewhat from Wednesday's mini-panic. We are still LONG UDOW -- and 75% long the market.

Gold, oil, and commodity stocks got crushed on Wednesday. Today, we got this signal:

We missed giving a BUY SIGNAL CHART from yesterday. When our COUNT gives a TRADING SELL SIGNAL, declines, and then flatlines without falling, generally, this is a statutory BUY SIGNAL. Note how Nestles has done this. And is now back up again.

We love NESTLES here. Perhaps not as much as Micron Technology -- but almost as much.

Here is our report:

Column1 Column2 Column3 Column4 Column5 Column6 Column7 Column8 Column9
4/20/17                
                 
COUNT SIMPLE PORTFOLIO REPORT            
      COUNT     New Pos New Pos  
SYMBOL CLOSE COUNT DIFF PROP1 POSITION Today Yesterday ISSUE
                 
MYL 37.08 -26 -2 -25 Short     Mylan Labs
STNG 4.07 -8 -2 -25 Short     Scorpio Tankers
SWN 7.46 8 -2 -25 Short     Southwestern Energy Corp
CAAS 4.93 -12 -2 -23 Short     Chinese Auto Daily
SPU 3.56 4 0 -23 Short     Skypeople Fruitjuice China
DSLV 21.55 -16 -2 -19 Short   Enter Short * Silver Stocks Bearish ETF 3x (NO)
HTZ 15.85 -30 0 -19 Short     Hertz
BRZU 37.09 2 2 -7 Long     * Brazil Stocks Bullish ETF 3x (NYSE:O)
KTOS 7.57 22 2 -7 Long     Kratos Defense & Security
NSRGY 75.793 30 0 -7 Long   <--- Nestles
ABX 19.2 28 2 -5 Long     American Barricks Gold
GDXJ 34.54 26 2 -5 Long     Gold Junior Minors ETF Daily
LBJ 105.99 22 2 -5 Long     * Latin America Stocks Bullish ETF 3x
OIL 5.49 8 2 -5 Long     Oil ETF
PBR 9 6 2 -5 Long     Petrobas Petroleum Brasil
SAND 4.29 26 2 -5 Long     Sandstorm Gold
SSRI 10.58 28 2 -5 Long     Silver Standard Resources
USLV 15.68 16 2 -5 Long   Enter Long * Silver Stocks Bullish ETF 3x (NO)
FSM 5.02 30 2 -3 Long     Fortuna Silver Mines
PAAS 18.08 28 2 -3 Long     Pan-American Silver
^VIX 14.15 22 0 -1 Long     CRB Volatility Index Daily
^XAU 86.774 28 2 -1 Long     Phila Gold/Silver Ind $
AG 8.79 22 2 -1 Long     First Majestic Silver
COP 47.95 6 2 -1 Long     Conoco Philips Daily
GFI 3.92 28 2 -1 Long     Gold Fields
HDP 10.55 2 2 -1 Long     Hortonworks
HL 5.56 22 2 -1 Long     Hecla Mining
IAG 4.35 22 2 -1 Long     I Am Gold
NDLS 5.6 30 0 -1 Long     Noodles
OMER 16.07 16 2 -1 Long     Omeros Corporation
RGLD 72.68 28 2 -1 Long     Royal Gold Inc
UGLD 11.25 22 2 -1 Long <---   * GOLD ETN BULLISH 3X (NO)
SRPT 32.54 -18 2 3 Long     Sarepta Therapeutics
WKHS 2.3 -12 2 3 Long     Workhorse Group
ACH 13.26 4 2 5 Long     Aluminum Corp of China
AHGP 27.59 2 2 5 Long     Alliance Holdings Mining
AMSC 6.77 28 2 5 Long     American Superconductor
BBRY 9.1 30 2 5 Long     Blackberry (RIMM)
CBPO 115.14 24 2 5 Long     China Biologic
CTL 25.49 24 2 5 Long     Century Link
DRN 23.76 20 2 5 Long     * Real Estate Stocks Bullish ETF 3x
EGO 3.6 24 2 5 Long     El Dorado Gold Mines
GNC 8.78 -14 2 5 Long     GNC Holdings
GVA 52.33 10 2 5 Long     Granite Construction
HLF 60.4 28 2 5 Long     HERBALIFE
KBR 14.85 6 2 5 Long     KBR INC
LOCO 12.35 18 2 5 Long     El Pollo Loco
OTIV 1.65 8 2 5 Long     On Track Innovations
SPWR 6.73 -8 2 5 Long     Sunpower
SSYS 24.31 22 2 5 Long     Stratasys LTD
TOO 5.68 4 2 5 Long     Teekay Offsore Partners
UHN 14.993 16 2 5 Long     Heating Oil ETF
W 45.64 30 2 5 Long     Wayfair
YGE 2.73 14 2 5 Long     Yingli Green Energy China
TSLA 302.51 24 2 17 Long     Tesla Motors Daily
                 
Initiated                
3/3/17   2.14% --->---> COUNT Simple        
3/3/17   5.24% --->---> COUNT Plus        
                 

We are LONG OMER. We've made a good profit on the first leg of this BULL MOVE. Now we are getting a secondary buy signal -- which means we think it is going higher.

Best fortune.

MJC, CGTS

Disclosure: I am/we are long OMER, UDOW.