TNA Hits Target

TNA gaped up on today's good employment news to exceed the target set back November 27th, and evoked by breaking out on December 22nd. The Measured Rule used to calculate this target states simply that the lowest excursion below the trendline can be used to calculate a target above the trendline from the point of breakout. This target is reached 85% of the time. The Point & Figure target calculated virtually equaled this target.

Both trendlines (heavy blue lines) were retested and on January 5th a linear regression channel was drawn that remains valid even today. A position taken at that time around 46 would today yield a profit of 17 points in a month. Touches of the lower channel line also provided seven additional entry points during this month, had the initial one been missed or additional positions been wanted.

The position opportunity on January 9th coincided with a Bollinger band squeeze, and prices gaped above a major resistance level the next day. The entire price appreciation has also taken place above the Bollinger band centering moving average. This particular Bollinger band used a 13-day simple moving average rather than the more traditional 20-day average. Had the twenty days been used, the squeeze would have not been apparent.

This trade validates resistance levels (horizontal red lines) because each caused price pauses and retests, the retests providing the additional entry points. It validates trendlines (blue lines), regression channels (black lines with the outer channel lines 2 standard deviations away from the linear regression line itself), the Measure Rule for target price determination, and Bollinger bands (red center line with two blue lines 2 standard deviations away).

Finally, the trade validates the potential of swing trading--the attempt to profit by the variation of prices over a several-day time span.