KMI Bearish Cross Plus Possible Head And ShouldersOn April 17, 2017, Kinder Morgan Inc ( KMI ) crossed below its 200 day moving average (DMA) and its 50 DMA crossed below its 100 DMA. Historically both bearish crosses have not occurred on the same day. Historically the stock has crossed below the 200 DMA 14 times and the stock drops a minimum of 0.379%. It has a median loss of 3.716% and a maximum loss of 8.089% over the next 25 trading days. Historically the 50 has crossed below the 100 6 times with a minimum loss of 1.609%. It has a median loss of 3.912% and maximum loss of 13.387% over the next 25 trading days.
When we take a look at other technical indicators, the relative strength index (RSI) is at 46.5454. RSI tends to determine trends, overbought and oversold levels as well as likelihood of price swings. I personally use anything above 75 as overbought and anything under 25 as oversold. The current reading declares the stock is relatively neutral.
The true strength index (TSI) is currently -2.3514. The TSI determines overbought/oversold levels and/or current trend. I solely use this as an indicator of trend as overbought and oversold levels vary. The TSI is double smoothed in its calculation and is a great indicator of upward and downward movement. The current reading declares the stock is moving up.
The positive vortex indicator (VI) is at 1.0716 while the negative is at 0.9058. When the positive level is higher than 1 and higher than the negative indicator, the overall price action is moving upward. When the negative level is higher than 1 and higher than the positive indicator, the overall price action is moving downward. The current reading declares the stock is up, but the negative indicator has begun to climb and the stock could continue to drop.
The stochastic oscillator K value is 33.4349 and D value is 55.5570. This is a cyclical oscillator that is highly accurate and can be used to identify overbought/oversold levels as well as pending reversals and short-term activity. I personally use anything above 80 as overbought and below 20 as oversold. When the K value is higher than the D value, the price action is trending up. When the D value is higher that the K value, price action is trending down. The current reading declares the stock is dropping.
Considering the moving average crossover, RSI, TSI, VI and stochastic levels, the overall direction appears to continue heading down. Based on historical movement compared to current levels and the current position, the stock could drop another 2.18% over the next 22 trading days. The stock has also formed a possible head and shoulders pattern with the neckline below 20.80 which could be a solid target price. Earnings are scheduled for April 19 which could cause a major price swing in the first few days of the projected timeframe. Estimates are in line with the previous two quarters results. After both earning announcements the stock went up but ultimately dropped over the next 25 trading days.
KMI
Lacking Positive Energy for KMIHistorically when the True Strength Indicator reaches its current level the stock drops a minimum of 1.18% with an average of 5.06% over the next few weeks. I am tracking multiple potential trendchannel support levels and the first level to get hit coincides with a shared support level at 19.83. From the CLOSE on December 30, 2016, movement to this level would equate to a drop around 4.25% which is very realistic.
Long KMI - excellent trendFew days ago KMI moved out of consolidation zone on higher volume. Weak structure above and price discovery mode almost guarantee (I don't usually say that :) ) growth up to $24 and higher ($32).
Today KMI will have earnings announcement after market close, so I am going to use possible wide price swings to buy some shares.
This is one of the Buffett' companies anyway (with average price of $23,65), so I prefer to have it in the long-term portfolio.
(Buffett portfolio)
NEXT WEEK'S EARNINGS PLAYS -- NFLX, IBM, GS, SBUX, AND OTHERSNext week is literally hopping with potential earnings announcement plays.
I've tried to pick out the ones that (1) have > 70% implied volatility rank; (2) offer greater than a 1.00 credit ($100) for the "classic" one standard deviation short strangle setup; (3) have fairly good liquidity with options prices; and (4) offer weeklies, but there are also a few >.50/<1.00 credit plays that I might nevertheless play (e.g., CREE, SBUX), although I think I can afford to be picky here given the selection ... .
PLAYS TO PUT ON TUESDAY
CREE -- Tuesday, after market close. High implied vol rank/high implied vol, but <1.00 credit for a 1 standard deviation short strangle.
IBM -- Tuesday, after market close.
NFLX -- Tuesday, after market close.
GS -- Wednesday, before market open.
PLAYS TO PUT ON WEDNESDAY
SBUX -- Wednesday, after market close. High implied vol/but implied vol <50% and <1.00 credit.
PLAYS TO PUT ON THURSDAY
SLB -- Thursday, after market close. I don't think I've every played this underlying. It's a tech company that provides support to oil and gas, and I've got plenty of petro plays on.
Notes: There are also a couple of earnings plays that might be interesting to play via other methods. One of these that comes to mind is KMI. It's got a high implied volatility rank, high implied volatility, and liquidity. The problem is that the price of the underlying is currently $13.00, so you just can't get enough premium out of it via short strangle or iron condor to bother with it using one of those strategies ... .
Kinder Morgan Dead Cat bounce After a horrible 6 months or so for energy related stocks KMI finally cut their unsustainable dividend by %75 causing the stock to crash (www.fool.com) .While a short term bottom was found around $15 the chart is now making a nice bear flag. It looks to me like a dead cat bounce. With no real support insight and the energy sector continuing to be lack-luster I do not see this drop stopping any time soon.