Super Stock In Play - High Publicity Stock with SEC
Day 1 - Large Gap, Lower highs holding below VWAP, *Consolidation at the lows
Day 2 - *2nd Day Play, *Hold Below Day 1 Lows
Day 3 - Day 3 Drive, *Uptick Rule Reversal
* Indicates Best Play of the Day
Dates: 07/02/2013, 07/03/2013, 07/05/2013
*July 4th Holiday*
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Linn Energy, LLC, an independent oil and natural gas company, engages in the
acquisition and development of oil and natural gas properties. The company’ s
properties are located in the Mid-Continent, the Hugoton basin, the Green River basin,
the Permian basin, Michigan, Illinois, the Williston/Powder River basin, California, and
East Texas in the United States.
Average Daily Volume: 3.25 Million
Average Trading Range: 1.78
Insert Co. Image
Day 1 News:
Wall Street Generally Sells First and Asks Questions Later. An SEC Investigation is one of
those times to sell first.
Tuesday, July 2, 7:49 AM Linn Energy (LINE) -9.9% premarket after saying the SEC has opened
an informal inquiry into its financial disclosures and its pending merger with Berry Petroleum, its use
of non-GAAP financial measures relayed to investors and its hedging strategy. The SEC action
comes amid scrutiny from financial media and research firms into the driller's financial health. LNCO
-12.3%, BRY -6.8%
Tuesday, July 2, 12:34 PM Linn Energy (LINE -14.4%) and LinnCo (LNCO -12.2%) are
downgraded by at least three firms following the disclosure of the informal SEC inquiry. J.P. Morgan
expects significant volatility in LINE until the SEC inquiry is resolved and the impact on the Berry
(BRY -5.2%) transaction is known. Howard Weil thinks the SEC could wind up forcing LINN to
restate non-GAAP discretionary cash flow (Briefing.com)
Day 2 News:
Wednesday, July 3, 10:37 AM It's shaping up as another difficult day for Linn Energy (LINE -9.3%)
and LinnCo (LNCO -8%) after yesterday's selloff. After a round of downgrades, Stifel Nicolaus today
cut its price target on both to $33 from $48. Selling the put portfolio would not be a wise option, the
firm says; Linn would shed some controversy but sacrifice possible future cash flow. Baird cautions
broadly on upstream MLPs; BBEP -9%, ARP -7.1%, VNR -6.3%, QRE -6.2%, EVEP -3.2%.
The daily chart shows that support has been broken prior to this announcement.
Also already trading near 2 Year Lows.
This stock has been very publicized lately with several well known hedge funds
involved as well as Cramer talking about it.
Day 1- Intraday Technical Analysis
Intraday Chart Annotated
This stock is gapping down from $33 on news of an SEC investigation. This is the type of news that will cause
something to close at the lows of the day.
1) Depending on liquidity look to get involved PM when it can't get above a certain price. This stocks ATR is > 1 so
you could see 2-3 points of a move today. Give it enough room and don't be afraid to put on the risk.
2) On the open it can not pop through the PM resistance - Get Short. You can kick off half into the quick drop.
Remember this should move today so you have to be ready to add back.
3) After it pops back up it starts to drift downward and establishes lower highs. Finally gets below and holds below
VWAP - get bigger.
Give it a chance to make new lows but when it doesn't it's a failed breakdown so take half off at previous lows and
look to add back.
4) Once again makes a lower high and holds below VWAP - add back what you took off at the lows.
5) 35 Minutes of tight consolidation at the lows. You HAVE to put on size here. This should be A+ play risk. Add at the
top of the tight consolidation and Pay the break of the new lows too. Kick out into steep move and volume peak.
6) Can't really bounce much after a steep move and it has the uptick rule. Sellers are in control. Add back what you
took off at resistance and on trendline break.
7) Lower highs - Add more at 27.50 resistance and trendline break for the close at the low.
Hard to judge how far this could go. $27 would be 3 points from the open and 3 times the ATR. It should close at the
lows and can keep core overnight.
Day 1- Intraday Technical Analysis
Day 2- Intraday Technical Analysis
This is the 1 Minute chart of the open
zoomed in. Opening Drive lower and holds
at the lows giving you time to add at point
1) It doesn't gap down much and opens near where it closed. This point is the previous day's'
low. Can play momentum through this level.
2) Opening drive lower and holds at lows. Add size. See enlarged section for 1 minute chart.
3) Holding lower. Look to add.
4) $24.50 offers clear resistance. Add here against the level on trendline break. If you take off on
failure to make new lows look to add on the break of that level.
5) Retest of the breakdown level. Add size here.
Again we don't know where this could end the day. $23 is a 4 point move and 4 times the ATR. It
should close at the lows of the day.
**This day ended at 1PM due to 4th of July Holiday.**
Day 2- Intraday Technical Analysis
Day 3 is Potential Uptick Rule Reversal. Prefer to see one final push lower on the open and then
consolidation above VWAP.
1) Gaps up slighlty to prior breakdown level from Day 2. Can look to play against this level for the
Day 3 Opening Drive.
2) Low Risk PM Play. Get involved here. Again looking for the third day final woosh on the open.
3) If you have any position remaining you are out on this pop higher and definitely above VWAP.
4) 30 Minutes consolidation above VWAP is our Uptick Rule Reversal Entry. The high of the day is
2 points away and it is down a lot. Willing to risk .40 for 5:1 RvR. Can also pay the break of this
consolidation high.Kick out some to cover risk into #2 PM Level.
5) Finds some support and makes a higher low. Look to add.
6) Better add than #5 with lower risk. Look to take off half on momentum through PM high. If it
struggles at PM high take off half. The rest is playing with houses money. Keep stops tight.
7) Hold above 24 and PM High - add. Kick out into 25 as nearly a 4 point move.
Day 3- Intraday Technical Analysis
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