Tuesday, May 5, 2009
Which one would you buy TNA or BGZ? Careful, this is a trick question.
OK, TNA up almost 200% in less than 2 months. In a well defined rising wedge with a wedge at the top. Negative divergences showing up and indicators living in a nice overbought zone. BGZ on the other hand is down 60%ish and indicators are oversold. It is in a well defined falling wedge with another wedge ending the formation.
So which would you choose? Well, I'm not sure what the correct answer is. By this I mean both can be correct. BGZ short term and TNA long term. The momo is with TNA and the near term play is with BGZ. I am convinced that BGZ is in an under throw situation and will get a pop here while TNA is in an ending rising wedge and will fall. How much will they move? Not as much as you might expect, because I expect (because of the EWT count of the SPX)them to stay in their respective trends to continue for a little while longer.
BGZ will get its day in the sun, but not till a little more pain is felt by the shorts. Let this structure play out on the SPX and then you can make your move. Don't get sucked in by this brief pullback (if that even occurs). If you play them make sure you have a well defined plan of entry and EXIT before you play with fire. Don't be ashamed to exit a losing position, cause this can save your hard earned cash.