Technical Trade Of The Day - 07/06/09
Saturday July 4, 2009
Navivest
The stock market is at a critical juncture. Thursday’s huge drop in the major indices and the close at or near the day’s lows, should cause some nervousness on Monday, with traders waiting to see if a further breakdown is in store.
The S&P 500 broke below is 50-day moving average on Thursday and the 100 day moving average is just below that. Stock market technicians will be watching so see if we violate that as well, which could portend a move down to the 200-day moving average line.
While the technical signals are screaming caution, we are cautiously optimistic. From a technical analysis standpoint, we are getting a double bottom formation, from which we could see a bounce. Additionally, we got the huge drop on Thursday because of poor economic data.
In recent weeks, we’ve seen the stock market drop on concerns about the global economy and within day’s there is some commentary from somewhere that renews hopes that we are at a bottom in terms of the economy and stocks rally.
So in the hoped for absence of more bad news next week, we might see the same happen in this instance as well.
Traders can look to purchase call options on the S&P 500, while protecting on the downside by buying smaller quantities of puts as well. We also like IBM at current levels, which we’ve recommended in an earlier post, as a trade for Monday.
Of course, we do want to trade with caution and make sure that the stock market is indeed heading in the direction we choose to trade.
IBM A Buy At Current Levels
Friday June 19, 2009
Navivest
On June 6, we recommended IBM as a buy based on the stock’s recent chart pattern. As we pointed out, IBM has developed a tendency to trade in a range, in what stock market technicians call a channeling pattern.
The stock rises to a resistance area, pulls back to a support area and then bounces back up to resistance again in a very short trading period.
In May, IBM channeled between $101 and $106, but with the stock being in an up-trend, the range is now between $106 and $108.
Since June 11, IBM has fallen back from the $109 area down to yesterday’s close of $106.33. At this level, the stock is forming a double bottom, which is a bullish technical signal. We should see IBM move back up again and traders initiating a long position in the stock can pick up a few points. Option traders should consider the July 105 calls.
The Technical Trader - MicroStrategy
Friday June 19, 2009
Navivest
MicroStrategy Incorporated (MSTR) rocketed up $3.25 to $50.25 in trading yesterday, on more than double the average daily volume in the past three months.
The stock had been pulling back in the prior four sessions and with today’s rally to the upside, the stock was moving off a double bottom pattern.
The stock should tack on a few more points and if the stock market overall isn’t weak today, the stock is a buy here.
As always, the markets have been volatile of late and we would take early profits as soon as we get them.
====================================================
Navivest provides subscription based trading advisory services for stock and options traders. For more information on our services, visit our website at http://www.navivest.com
====================================================
Stock Recommendation - Longtop Financial
Wednesday June 17, 2009
Navivest
On Wednesday May 27, Longtop Financial (LFT), which provides software development services to the financial industry in China, closed at $23.17.
After the close of the stock market that day, the company reported fourth quarter and full year results for the fiscal year ending March 31, 2009. The next day, the stock opened at $24.85 and closed at $27.45.
The stock held those gains for a while, but started to slip a week ago, closing down five out of the last six trading sessions, with the downward momentum picking up steam in the last three trading sessions.
Yesterday, the stock closed at $25.02, down $1.65, putting the stock just above its 50-day moving average.
We are looking for a slowing of the downward momentum and a reversal at this key area. On that, we are recommending buying the stock at current levels.
If the stock market is strong at the open, go long LFT shares, entering up to $25.50. Do not enter into the trade if LFT is down by more than $0.30.
On a short-term basis, should we see a rebound in the shares, we can look for a move to the $28 area, possibly $30. But with the markets so volatile, we advocate taking very early profits. Once in, if the stock is up $1.00 - $1.50, unless hedging the position by buying puts, we suggest taking profits.
=====================================================
The above trade recommendation is a sample of our subscription based Navivest Equity Trader trading advisory service. Click here for more information on Navivest Equity Trader.
=====================================================
The Technical Trader - Avalon Bay Communities
Tuesday June 16, 2009
Navivest
Shares of Apartment building developer and operator Avalon Bay Communities (AVB) dropped $3.30 to $57.90 in trading yesterday, continuing a slide that started last Wednesday.
The stock is now right at its 50 day moving average – it violated the 150 and 200 day moving averages with today’s drop and if we see a breakdown below this level, it could portend significant losses for the shares.
Traders should keep AVB on the watch list and look to short the stock or buy puts on the underlying if we go below current levels. If the stock holds above current levels, go long.
The Technical Trader - Palm Shares Looking Attractive
Friday June 12, 2009
Navivest
Shares of handheld device maker Palm (PALM) rallied 12.01% yesterday, after the stock added $1.44 to $13.43 on volume of 23,269,27 compared to the three month average volume of 8,091,020.
The company started the electronic organizer craze with its Palm Pilot, but got left behind after cell phone manufacturers started adding features to their products, creating the smart phone.
The company released its latest offering, the Palm Pre on Saturday June 6 and the phone, which has had quite a buzz for the past year, was well received, with an estimated 50,000 of the devices being sold the first weekend. The shares are also being helped by rumors that pc manufacturer Dell (DELL) might be looking to acquire the company.
The company underwent a leadership change on Wednesday, with former CEO Ed Colligan, being replaced by the company’s chairman John Rubenstein, who came over from Apple (AAPL).
On a technical analysis basis, Palm shares pulled back yesterday, falling $0.85 from the opening price. With that pull back, the shares formed a double bottom, a formation from which technicians usually expect to see a rise and we got that from Palm yesterday.
We are bullish on Palm shares, but we would like to see the stock first clear the $13.65 range. As such, we would look to go long the shares around $13.75.
The Technical Trader - Chindex
Tuesday June 9, 2009
Navivest
Shares of Chindex International (CHDX), which supplies western technology medical equipment to the Chinese market, rose $1.52 to $10.85 in trading yesterday.
The stock broke above its 200 day moving average on May 28 and has not only held above it since then, but with today’s move, the stock broke blew past resistance at the $8.50 to $8.75 area, which should hopefully now form a new support area.
At this point, the stock could either tack on more impressive gains or pull back, before continuing moving to the upside, or breaking down. We think the bias is to the upside.
The company does report fiscal 2009 fourth quarter and full year results on Thursday and that will obviously impact the share performance in the days after the news is released.
For those going long the stock today, we would recommend taking profits on Wednesday or even before, if the stock moves up after entering.
The Technical Trade - BOOM
Friday June 5, 2009
Navivest
Shares of Dynamic Materials Corporation (BOOM), which started the year at $19.40, but then trended downwards with the rest of the market and hit a low of $5.06 on March 9, has rallied dramatically since then, to close at $21.88, up $2.25 yesterday.
The stock is now trading at new highs for the year and looks poised to extend the rally. The stock’s performance yesterday was very bullish, extending a newly formed rally, and breaking above resistance around the $20 area to set the new 2009 high.
BOOM has some more near term upside to go we believe. However, we would like to make sure the stock can hold above $21. Our trading plan for the stock would be to go long if the stock market is extra bullish today.
We will be getting jobs numbers from the Labor Department before the bell today and if the news is a positive for the market enter into the trade, if not, we will wait for a pull back.
If traders are able to go long the stock today, we recommend taking early profits.
The Technical Trader - 06/02/09
Tuesday June 2, 2009
Navivest
On May 26, Shares of AmeriCredit (ACF) broke of a tight range between $10 and $11 that the stock has been trading in for most of May. Since then, the stock has moved from the $10.50 area, to a close of $14.07, up $1.36 yesterday.
The company provides automobile financing and perhaps the bankruptcy filing of both General Motors (GM) and Chrysler has traders thinking the company will see an up-tick in business.
The action in the shares yesterday were especially notable, as financial stocks were actually weak yesterday, despite the strong rally in the overall stock market.
If the market is strong today, we recommend purchasing the shares and having a limit order in to exit at $15.
The Technical Trade - Fuqi International
Wednesday May 27, 2009
Navivest
Shares of Chinese company Fuqi International Inc, (FUQI), which produces precious metal jewelry, have been on a run lately, after starting a rally on 5/14.
The rally on 05/14 was an extension of an earlier rally that was started on 04/29 when the stock broke out of a month long sideways pattern. With that rally, the stock moved from a close of $5.04 on 04/27, to a close of $7.39 on 05/11. Then on 05/12 and 05/13, the stock dropped to a close of $5.89.
The close at $5.93 on 04/29, actually formed a support area for the stock and with the two-day pull back on 05/12 and 05/13, the stock actually bounced of that support area, to start a new up-trend.
On 05/15, the stock gapped up at the open, to start the day at $7.23, from the prior close of $6.49. On that day, the stock hit a high of $8.09, but closed at $7.61. The stock had formed resistance around the $7.40 - $7.60 area and the close right there that day, was a perfect textbook technical analysis example.
At that point, the stock could have gone in either direction in the absence of news and any break above that resistance area would be a strong buy signal. Sure enough, the next day, the stock broke above the area and has moved up every day since then, to Wednesday’s close of $12.06.
We are now looking for the stock to again pull back and take a breather from the recent incredible run. If the stock market is weak today and FUQI starts to move to the downside, short the stock. Enter at current prices down to $11.50. If the markets are strong and FUQI moves to the upside, wait, we would then look to short at higher prices.
-
-
About
The Navivest Stocks and Options blog provides trading ideas and stock market commentary daily.
-
Recently Written
- Technical Trade Of The Day - 07/06/09
- Seven Banks Shut Down, Brings 09 Total To 52
- Oil Price Falls 5.48% In Two Days
- Stock Recommendation For 07/06/09
- Stock Market Report - 07/02/09
- U.S. Unemployment Rate Now 9.5%
- Auto Parts Supplier Lear, Filing For Bankruptcy
- Stock To Watch - Oshkosh
- Stock Market Report - 07/01/09
- Trade Recommendation - 07/01/09
-
Categories
-
Archives
-
Blogroll
-
Admin
