Breakout Chart with 25% Profit

dec 16, 2013 | Trading

Impac Mortgage Holdings, Inc. operates as an independent residential mortgage lender. It operates through three segments: Mortgage Lending, Real Estate Services, and Long-Term Mortgage Portfolio.

Trade information

Market Cap	52.32M
Float	6.05M shares
Avg 3-months volume	32,447

After a 2 month long downtrend, including announcing bad third quarter results, $IMH seemed to have found it´s bottom and started to turn around. On December 3rd they announced the sale of one of their subsidairies. The subsidairy AmeriHome Mortgage Corpartion, which was a redundant mortgage operational platform, will not only improve near term cash balances and profitability but will also help the Company to streamline its mortgage operations. The additional cash from the sale will allow the Company to continue to build its mortgage servicing portfolio. This news was what IMH needed to find it´s bottom and try to get back up.

December 09-12: The chart shows the first white candle on the day of the news, December 3rd, and the trading volume increased as well. The third day the chart showed a doji canlde which can be a turnaround sign, but as you can see it wasn´t. As it still wasn´t clear to me what to stock was going to do I decided to wait for a definite sign in the chart.

December 11-12: The next day it continued to gain and show another white candle, this should have been a sign to enter a long position as it seems the trend is going higher. It closed just under $5.50, with support at $5.25 and the next resistance just under $6.00. This would have giving me a 1:2 risk/reward ratio. But I wanted to see it break the big resistance of $6.00, as this was the price the stock traded around for about 8 days.

If it could break through $6.00 and make this big resistance support it would be even better for me. In that case the risk was just a few cents under my possible entry in the low 6. And my potential reweard would be it’s next resistance just over $6.50. So let’s say I could buy at $6.10, than it would make a 1:5 risk/reward ratio that sounds much better to me.

December 12-12: In the opening the stock broke $6.00 and I entered a buy order for 150 shares which got filled at $6.07. Around 11.30am the stock topped just under $7.00 and traded around $6.75 for the rest of the day. I’m holding my position overnight as the intra-day chart looks strong and I am anticipating a gap-up tomorrow.

December 13-12: It opened at $7.11, great gap-up this morning and it soon spiked up to it’s day high of $7.84. I sold of my position into this morning spike and got out at $7.63. A nice 25% profit on this great chart play! After this spike it went down and found support around $6.50.

Will be watching where this stock goes from here. It found a solid support around $6.75 from early November. If it can continue it’s uptrend this week the next real resistance is at $8.25. Which gives another great risk/reward potential. Still a potential long for me when it shows a strong start of the week.

Impac Mortgage Holdings, Inc. operates as an independent residential mortgage lender. It operates through three segments: Mortgage Lending, Real Estate Services, and Long-Term Mortgage Portfolio. The Mortgage Lending segment primarily originates, sells, and services residential mortgage loans eligible for sale to the government-sponsored enterprises (GSEs) or issuance of government securities through Ginnie Mae from retail, wholesale, and correspondent channels. The Real Estate Services segment provides loss mitigation and real estate services primarily on its long-term mortgage portfolio, including default surveillance, loan modification services, short sale services, real estate owned, surveillance and disposition services and monitoring, and reconciling and reporting services for residential and multifamily mortgage portfolios. The Long-Term Mortgage Portfolio segment manages the long-term mortgage portfolio, which consists of residual interests in the securitization trusts reflected as net trust assets and liabilities in the consolidated balance sheets to mitigate losses and maximize cash flows from residual interests.

On November 6th they’ve announced Results of Third Quarter 2013.

“Impac Mortgage Holdings, Inc. (NYSE MKT: IMH) announces financial results for the quarter and nine months ended September 30, 2013. For the third quarter of 2013, the Company reported a net loss of $(4.9) million or $(0.56) per diluted common share, as compared to a net loss of $(2.3) million or $(0.29) per diluted common share in the third quarter of 2012. For the nine months ended September 30, 2013, the Company reported a net loss of $(4.5) million or $(0.52) per diluted common share, as compared to a net loss of $(2.9) million or $(0.36) per diluted common share for the nine months ended September 30, 2012.”

On December 3rd they announced the sale of AmeriHome Mortgage Corporation

“Today announces the sale of its fully licensed and agency approved seller/servicer subsidiary, AmeriHome Mortgage Corporation (“AmeriHome”). [highlight]This transaction is expected to close early in the first quarter of 2014 at a significant gain[/highlight]. The sale is subject to change of control requirements by the state, and government agencies including Fannie Mae, Freddie Mac and Ginnie Mae. The transaction includes the sale of AmeriHome’s primarily agency servicing portfolio of approximately $700 million in unpaid principal balance, but will not affect the ongoing operations of Excel Mortgage Servicing, Inc.

The sale of AmeriHome, which was a redundant mortgage operational platform, will not only improve near term cash balances and profitability but will also help the Company to streamline its mortgage operations. The additional cash from the sale will allow the Company to continue to build its mortgage servicing portfolio.

Joe Tomkinson, Chairman and Chief Executive Officer, commented, “We believe the sale of AmeriHome mortgage lending platform will give the Company additional options as we navigate through the current challenging mortgage market. Looking forward, our goal by the first quarter of next year is to further position the Company to take advantage of opportunities in the mortgage lending market as new regulatory rules take effect.”