Bulkowski's CHG Trade

Written and copyright © 2011 by Thomas N. Bulkowski. All rights reserved.

I like owning electric utility stocks because they pay you to hold them. That was true in the past and it's certainly true now, but in the future, with greenhouse emission regulations coming, then making a profit from utility stocks I think will be harder to come by.

I've owned CH Energy (CHG), pictured (weekly scale), for years. I range trade it. That means I buy low and sell high. The low price is often in the low 40s when I buy and the target exit is above 50 (I try for 52). You can see the range if you flip to a wider time scale.

This is an example of such a trade.

When price reached support at B, forming a potential double bottom low (A), I bought the stock on June 3 at 39.72. It wasn't the bottom, which I missed by three days. That's not bad.

The double bottom chart pattern confirmed when price closed above the peak between the two bottoms, at D. That's the traditional buy point.

I held onto the stock, hoping to sell it at 52 and collect a 5.4% dividend along the way. That's the dividend rate based on my purchase price.

When price neared 50, I placed a limit order to sell at 52. That triggered on April 5 (C) for a net gain of 35% including three dividend payments (otherwise it would have been 30%).

-- Thomas Bulkowski

Written and copyright © 2011 by Thomas N. Bulkowski. All rights reserved. You'll never know what true happiness is until you're married...and then it's too late.