One You Want, One You Don't (ACAD, NTEK)

Call them hunches (because that's all they are), but now would be a great time to get out of a NanoTech Entertainment, Inc. (OTCMKTS:NTEK) position and/or get into an ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). NTEK looks like its reached its maximum potential - for the time being - while ACAD looks like it's ready to start rolling higher again.

Just so there's no confusion, and to avoid ruffling feathers, neither is a long-term call based on the merits of either company. Both are short-term, chart-based outlooks intended to take advantage of short-term trading realities. Translation: Don't take it personally if you're in a NanoTech Entertainment trade for the long haul, or if you've made a long-term bet against ACADIA Pharmaceuticals.

Yes, with just a quick glance, NTEK looks like it's in a solid uptrend. That's because it is. It looked like it was in a solid uptrend in late June and early July too, however, and that rally stopped and turned on a dime. Point being, nothing lasts forever. In fact, here and now looks like the ideal time for the bears to up-end the rally from NanoTech Entertainment, Inc.

Two things hint at that outcome. One of them is the fact that NanoTech Entertainment shares reached a new all-time high today by surpassing the July peak of $0.1395, Generally speaking, reaching new highs is a bullish hint to buy. In reality though - and with small caps in particular - new highs is a reason and opportunity for the smart money to start selling, right when everyone else least expects it. The other red flag is the fact that the bullish volume is waning on the way up, and has been downright tepid with this last leg. Something's got to give sometime.

But isn't ACADIA Pharmaceuticals Inc. wickedly overbought too? Yes... and no.

Though ACAD got overheated through the first part of October, it paid its dues for doing so - the stock peeled back from a peak of $29.38 on the 3rd to a low of $19.64 on the 9th, where it started to find near-perfect support at the 100-day moving average line (gray). The perfection and persistence of that support, in fact, is the reason we can have some confidence that the bulls drew a mental line in the sand there.

Better still is the way ACADIA Pharmaceuticals shares are now finding support at the 50-day moving average line (purple). Yeah, the 20-day line (blue) seems to have stepped in as a ceiling, but the bigger undertow has been turning bullish since Monday. We'll take the subtle hints at face value. And, if ACAD manages to close above the 20-day moving average line at $25.19 before sliding under the 50-day average line at $22.71, that'll be full-on bullishness. For most traders though, there's enough bullish undertow as it is right now.

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