ITG is a very volatile wide-ranging stock that was looking like it was going to the moon back on May 1st and here 4 weeks later looks like it wants to go fishing for the Titanic. The company operates as an agency brokerage and technology firm and on Thursday the company reported that the number of shares traded fell by 5% and that the volume of trading fell by 1.2%. This negative report, in conjunction with stop loss orders being hit below the major support level at $40, caused the stock to fall steeply on Friday.
ITG is evidently suffering from an industry wide problem of lower institution buying in the stock market and because of the innate volatility of this particular company, the stock got severely hit, up and above what other companies like NDAQ and NYX showed.
In looking at the weekly chart, though, the stock has reached a major level of weekly support with the drop on Friday down to 36.56 and seems to be at a level that is of interest for purchasing.
On a daily and weekly closing basis, ITG shows major support between 36.58 and 37.09 and some decent support below that at 34.97. On an intra-day basis, the support is quite strong between 36.36 and 36.57. Resistance is non-existent until the 40.22-40.58 is seen and even then, resistance must be considered minor at that price. Stronger resistance is seen at 42.50 and even stronger up at 44.15.
Over the past 2 years, on a daily and weekly closing basis, the stock has traded consistently between $36 and $50. With no specific negative news about the company, other than the industry wide problems associated with lower volume of stock trading, it seems probable that ITG's drop last Friday was severely overdone. In addition, the 200-week MA is currently at 36.36 giving that entire area one additional major support base.
It will be important to see how the stock opens up on Monday as an open below Friday's low of 36.56 could generate further strong selling, at least in the first hour of trading. If that happens, you should wait until the stock finds support before purchasing.
Purchases of ITG between 36.36 and 36.57 and using a stop loss at 35.26 and having an objective of 42.50 will offer a risk/reward ratio of 5-1.
My rating on the trade is a 6.5 (on a scale of 1-10 with the strongest probability rating being 10).
My name is Tony and I am a chartist. I have been trading for close to 30 years. In the 80's I was a broker/trader/analyst for Merrill Lynch, Dean Witter, and Pru-Bache.
I offer an inexpensive chart evaluation service on stocks of your choice through membership to my website and message board.
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I have put out a weekly newsletter on Sunday evenings for the past 17 months with mentions on stocks I like. It includes entry points, stop loss levels, and objectives.
Here are the results of all my newsletter mentions for the last 17 months.
17-month totals: Total amount of mentions = 273 Total amount of different stocks traded = 135 Total amount of profitable mentions = 121 Total amount of losing mentions = 152 Total amount of months showing profit = 14 Total amount of months showing loss = 3 Percentage of mentions profitable = 44% Total mentions on the long side = 127 Total mentions on the short side = 146 Total amount gained on profitable mentions, per 100 shares = $30,671 Total amount lost on losing mentions, per 100 shares = $12585 Total amount generated in commissions per 100 shares per mention = $4193
End result of all mentions for last 17 months = Profit of $13893, per 100 shares of each mention