MHK Mohawk Daily Chart

The MHK long trade was a thing of beauty. Keystone called the bottom at the green circle riding it up to that wild session 8 days ago. Remember the words 'don't marry the trade'. It was a quickie based on the positive divergence on the 2-hour chart (scroll back to study the chart) and insider buying by the corporate executive/s.

When the insiders are buying, take notice. Sometimes they are pre-scheduled buys which are less important or CEO's playing game feigning interest in their own stock to try and pump the lousy price higher. Actual unscheduled stock buying by the CEO or CFO or other executives or board members is notable since they know more about the company than anyone.

Mohawk does not give haircuts like the guys in Rancid sport while singing Ruby Soho. MHK is a flooring company. It does not take an Einstein to figure out that springtime is here and folks are going to want to perform house renovations and the ladies like to have new floors every few years. The seasonality is a tail wind for Mohawk. The greedy institutions are bringing the stock back down so all the thieves can jump aboard.

Keystone called that bottom using the 2-hour chart. MHK was a beautiful trade nearly a +20%-er in only a week and a half; another reason to cash-out at that spike day since it is foolish to give any of that back. The two-leg bull flag (pennant) pattern (blue) also told you that the price quickly ran to its peak (first leg up and second leg up should line-out with about the same point rise).

The daily chart above was set up with possie d but note that the MACD remains weak and bleak in the daily time period. This creates the several-day weakness now with the price slumping lower again. When MHK peaked at the top of the bull flag and then ran flat for three days (red bar) the chart indicators were in negative divergence, hinting at the retreat, although the MACD remained long and strong. Keystone was out of the trade but the thinking was that price would actually pop off that 20-day MA at 137, which is also the middle band, and come back up for the matching price high. At that time, the MACD would be neggie d and the nice clean path lower would begin on the daily chart.

That did not happen. Instead the weakness in the MACD from early March reasserts itself creating the drag lower on price. But just as the weak and bleak MACD is still having a say in the price action, so will the MACD that remained long and strong at the top a few days ago (price will come up for a higher high as time moves forward).

What on Earth is he talking about? Sounds like a lot of Greek mumbo-jumbo. As the previous post described, the MHK weekly chart is setting up for a nice multi-week rally. The insider buying and springtime create further upside fuel. If you bring up the weekly, you can see 5 weeks of matching price lows with the chart indicators all in possie d except for the MACD. It shows a tiny lower low. Remember, this weekly chart candlestick is last week's. Look at it after the opening bell this morning. MHK is basically set up for the multi-week rally and Keystone wants to buy into it again for another ride.

Thus, back to the MHK 2-hour chart again to use it as an entry timing tool. On the 2-hour, price makes a lower low, so does the RSI and MACD. The histogram is positively diverged ditto the money flow. The stochastics are in the basement and oversold so they want price to bounce now. It  is looking bueno, folks. Of course that is what you say right before you get punched in the face, like comedian Chris Rock by the little sucker-punching b*tch Smith last evening at the Oscars that no one watched. Everyone is watching the sucker punch event this morning. Smith laughed at Rock's joke about his wife, then felt a need to make a scene when she scowled, and damage his phony nice guy image by sucker-slapping Rock. Idiot. Open your eyes. Do you see the two America's? One for the rich and one for the poor. If you assaulted someone, you would be arrested and sitting in the county lock-up. The Smith jackass should have been taken out of there in handcuffs. America's class war approaches.

Keystone will probably start buying MHK long again today and add all week, then sit back and watch it for a few weeks. Keystone has no position in MHK right now long or short. If you want to wait to see the whites of its eyes before pulling the trigger, watch for a likely pop in price on the 2-hour to occur, then a roll over lower and down for a couple candlesticks to allow time for the RSI and MACD to go possie d. That would be the exact bottom in MHK. Also, use the weekly chart as a timing tool; you want that MACD to go possie d on the weekly. It will be fun to see if Mohawk runs higher this spring. Is anyone you know getting new flooring? That would serve as anecdotal input to the long trade. If you were in this trade and it is flat or not going your way, you can likely wait it out and in the weeks ahead be a lot happier camper. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 5:44 PM EST: Keystone is back in MHK on the long side and will likely hold it for a few weeks. Will probably add more as the week plays out unless something crazy occurs in the stock market requiring action. The possie d on the 2-hour looks good as well as the weekly. The daily chart may try to maintain sogginess in the price this week. Keep a mental stop on it because it can always be exited and then reentered a couple weeks later. The behavior of peers are important as well as the broad market so you can watch HD,LOW and SPX to see what the general vibe is going forward.