One of the names that popped up today on my alert for potential "Turtle Soup" setups is KIM. After opening up the chart for further inspection I noticed an interesting situation.
It is very clear that the stock is in a trading range since June. The upper boundary around $ 17.25 has been tested a few times and so has the lower boundary that shows up near $ 15.50. With yesterday's low at $ 15.74, KIM is testing that lower boundary again at the moment.
What makes the chart interesting is the fact that the trigger for a TS(+1) buy for today is a few ticks above $ 16.09 which is the low of 9/24.
Resuming the rules for the setup. Today must make a new 20-day low (that happened yesterday) and the previous 20-day low must be at least four days prior (that was$ 16.09 on 9/24). The buy signal is triggered when either on the day of the new low (that was yesterday) or the day after, that is TODAY, the price rises back above that previous 20-day low (+ a few ticks). Let's peg that "few ticks" at $ 16.20 and watch if today 10/4 KIM will be able to rally above $ 16.20 and continue that move.
If that happens we'll have a test of the lower boundary of the range in combination with a TS buy-trigger. That combination definitely looks like a tradable opportunity.
Remember: Initial stop goes just below YESTERDAY's low ($15.74) and should be trailed higher as the position becomes profitable.
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Julius de Kempenaer | RRG Research
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