02/01/05 --




01/27/05 --



01/26/05 --



01/06/05 -- Well this morning's rally looked really good til all the buying evaporated around 12:30PM. At the end of the day volume was good, but not great, the PPS gains were good but not stunning, and the trading ultimately did not form a bullish engulfing candle or manage a close above the downtrend of the past two weeks.

At the same time, buying was clearly evident in the 45 area. The 9:30 drop to 44.6 on only 10,000 shares was matched by a crescendo of buying of 400,000 shares from 44.6 to 47.2. So, the support at 45 was confirmed.

In other news, with regards to my comments yesterday on the **wrecked** uptrend, I figured out today that if you draw the uptrend a different way, coming off not the lowest low in April, but the two lows that succeeded it, youcan form a well-fitting trend line that for the most part, held up nicely today.

Some of the secondary indicators (MFI, Chaiken) are suggesting that selling energy has dissipated. MFI may be suggesting NFI has hit the low of this cycle, depending on whether you believe in drawing uptrends on secondary indicators.

If NFI opens up tomorrow and stays there through the 10AM fade, then I thinkNFI is back in buiness and headed for 48 to 49 inthe next couple days. If it opens lower, then buying another bounce off the supports could work, but I would be cautious if NFI closed below the trendline at about 45.5.

Those of you who read my posts know that I "threw a hail Mary" when NFI started coming up off the lows -- bought 60 contracts of NFI Jan 50's (representing 6000 shares). The spreads on options like these are a killer (.20 x .35 when I bought at .35) that came make short term trading profits difficult. When I bought them, I was hoping for a close closer to 47. If NFI opens down tomorrow, I'll probably exit that with a small loss.

Send me an email if you have any trading ideas or would like to request a chart.



01/05/05 -- Or not so Happy New Year! The NFI chart is very close to looking like total sh!t. If it closes down tomorrow, it will have clearly violated the uptrend from the April lows. That would be bad.

I can't see how it could possibly get below 40 for two reasons: there is a lot of support there on the chart; and while this selloff has been fast, it hasn't happened on very large volume and thus doesn't seem to have a lot of weight behind it. I can't see how it could get below 35 because then it would have a trailing yield near 20%, which in the past has always caused a bottom.

That said, if it goes down tomorrow, the uptrend from April will be **wrecked**, so NFI will need to define a new trend. I don't want to lose that uptrend.


01/03/05 -- Happy New Year! -- Here is the big picture with NFI, using a one-year daily chart to show all the support/resistance areas:

NFI went through its weak "internal" trendline support today. It either recovers later this week, or it's on it's way to the bottom of the channel at about 45 to 46. From there, a bounce off the trendline is a "strong buy," but definitely wait for the bounce before buying.

On the fundamental side, at 45, the trailing yield would be 14.8%. I think in 2005, they'll exceed 2004's 6.65 in divs, maybe with a whopper special. At 7.5 divs, 45 is a 16.7% yield. A more appropriate 11% yield would take the stock back to its all time high. From there, it would be time to start lightening up. So, I am a buyer at 45 and a seller starting at 58 on up.

12/29/04 -- Here is the big picture with Novastar -- the x-div drop (thanks for the 5% cash!) was halted at the 48.7 area, where support from the breakout and from the dotted interior channel lines lie. The next area of congestion is 53.5 to 56.

Over the next couple weeks, a run to that area is likely for two reasons -- (1) NFI is bounding off support after having fallen 15% from its intermediate high, so the short term trend is now UP; and (2) the buying pressure that sparked the run from 43 to 58 still exists given that the breakout area held up, so whatever motivated those buyers appears to remain relevant.

One element that's missing today is the volume on the rally, but I'm willing to attribute that to the holidays. Ideally for us long termers, NFI will rally on heavier volume next week and then stabilize and consolidate in the 50's before making another run at the mid-60's in a couple months.

Also, I am going to give myself a pat on the back for posting over and over that the top channel line would act as resistance during the recent runup.






Novastar - This chart shows the current intersection of the short-term uptrend support and long-term uptrend resistance lines and projects that their convergence should resolve by Wednesday, 12/22, when NFI will break through either of the two lines. If NFI breaks through the LT uptrend resistance, then the next stop is 60. If it breaks through the ST uptrend support, then it could drop to 54, 52.5, or lower!


Novastar precise chart

Novastar analytical chart