Cash Has Gone Global

I've been making the Mecca to Las Vegas for nearly 12 years. In fact, at one point my speaking obligations had me traveling to Sin City so often, I seriously considered buying a home there, after real estate prices crashed and burned in the region. While I did not wind up buying a home, I did buy the shares of a company very active in Las Vegas called Global Cash Access Holdings (GCA). This Facebook announced purchase was made earlier in the year just above $5, and as many of my followers know, the score was nearly a double, as these little shares rocketed to a high just over $9.

After selling out for a nice fat gain, it was time for GCA to cool off. And cool off it did as the shares subsequently took a tumble back to the low $6 range, which presented the second buy opportunity which I gladly took and announced on FaceBook in the mid $6 range.
Below, I’ve produced two charts of GCA for your study and review: one of the monthly time frame, the other of the daily time frame. Let’s take a careful look.

 Head & Shoulder Above the Rest
The monthly chart of GCA has clearly formed a very solid Inverse Head & Shoulders pattern, which is one of the most powerful, long-term reversal patterns in existence. This pattern represents the footprints of major institutional accumulation. The Left Shoulder (LS) is typically the last sharp, scary drop of the decline. While the Head (H) usually drifts lower than the LS, its low is created by a more gradual trickle, versus another sudden collapse. So, the head is actually the first sign that the selling, while still present, is beginning to subside a bit. But it is the move from the low point of the head that makes or breaks the possibilities that this pattern possesses. If that advance comes up to equal the high point between the LS and the head (see red dashed line), the odds of the H&S pattern being solid are very high. If, however, the move exceeds that high point, the H&S pattern is near certain of being solidly powerful.

The Head Driven Advance
As you can clearly see from the chart above, GCA’s seven month advance from January to July of 2009 exceeded the high point between the LS and the head ($7.75). While I sold out of the original position on this powerful advance above $9, I knew that next pullback just had to be bought. Advances that break the former high point are typically just a precursor of much more to come over the long-term.

The Caveat
But there is one point about the Right Should (RS) pullback that must be fully understood. That pullback must hold at or near the 20-period moving average (20ma). If it does not, all bets of buying the RS pullback are off. The chart above clearly shows that the 20ma was not violated, confirming the solid nature of the H&S pattern.

The Long-term Target
The position is currently profitable, but this profit is small in comparison to the potential. That does not mean that I won’t “add and reduce” as the stock moves to much higher prices, but I’m looking for these shares to at least double from current prices. The first target zone is in the $15 to $17 range. If the stock reaches the second target area, the shares will nearly produce us with a triple, adding to an already locked in 90% from the first play in GCA. Not bad. Not bad at all.

My Strategy
Let’s take a brief look at the daily chart of GCA, which will give us a more refined view of where I’d like to add to this tasty treat.

I have marked the most recent actions in GCA, which are detailed on the left side of the chart. However, it’s the right side I want to discuss. Notice how the shares are currently holding above the 20ma. While holding, a sideways base or price consolidation has formed. Any break above this base would likely ignite the next leg up. So, my action would be to add on a solid move above $7.95.

It is possible that GCA needs more time, resulting in a pullback first? Of course that’s possible. In fact, I see that GCA is at a point where it will have to make up its mind, right now. “Do I move up right now, or do I rest some more and pull in first?” Either way, the love affair with the stock will remain the same. A pullback deep enough could present the opportunity to add at more favorable prices. A break would send the shares on their way to another run. The beauty of playing for long-term gains over many months to, in some cases, years is that one does not have to rush. One can sit back and let the stock work out all its kinks without fuss or bother. And when the time is right, when the stock is ready and presents its opportunity, one can then pounce. What a stress free way to get wealthy. Can you think of anything better? I sure can’t.

My stop is just under $6.00, the most recent buy-in area. Enjoy the rest of your holiday.