SALT- Jan Effect Play Candidate! One to definitely add to the watch list.IMO
Scorpio Bulkers (SALT) , which is engaged in the marine transportation of dry bulk commodities. This stock has been hammered lower by the sellers in 2014, with shares down a gigantic 80%.
If you take a look at the chart for Scorpio Bulkers, you'll notice that this stock has been downtrending badly for the last six months, with shares moving sharply lower from over $9 a share to its new 52-week low of $1.76 a share. During that downtrend, shares of SALT have been consistently making lower highs and lower lows, which is bearish technical price action. That move has now pushed shares of SALT into extremely oversold territory, since its current relative strength reading is 14.99. Shares of SALT have now started to spike higher off its 52-week low with heavy upside volume and it's quickly moving within range of triggering a big breakout trade.
Market players should now look for long-biased trades in SALT if it manages to break out above some near-term overhead resistance at $2.09 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 1.93 million shares. If that breakout triggers soon, then SALT will set up to re-test or possibly take out its next major overhead resistance levels at $2.50 to $3.11 a share, or even $3.50 a share.
Traders can look to buy SALT off weakness to anticipate that breakout and simply use a stop that sits right below its new 52-week low of $1.76 a share. One can also buy SALT off strength once it starts to clear that breakout level with volume and then simply use a stop that sits a comfortable percentage from your entry point.
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