Stock Recommendation For 07/06/09

Thursday July 2, 2009
Navivest

IBM (IBM) was a big contributor to the 223-point loss in the Dow Jones Industrial Average on Thursday, with the $3.11 drop in the stock. The pull back however, put the stock at a key support level from which it should bounce off, if we don’t get any bad economic or company specific news in trading early trading next week.

Looking at a six-month chart of IBM, we see that at the end of March though the first couple days of April, IBM rallied right up to the $102 area, but then pulled back slightly, and traded in a range between $98 and $102, never quite being able to break above $102.

Then on April 28, the stock gapped up at the open and over the subsequent four trading days, the stock continued to trade higher and hit an intra-day high of $106.82 before starting to pull back again and forming support just underneath $102.

From a technical analysis standpoint, stocks that break out above a resistance area also tend to then form support at that area on a near-term pull back, which IBM has done. And if they do form support at the prior resistance area, then that is usually a bullish signal. Either the stock bounces back up again, or worse case scenario, we see a consolidation or sideways move.

We are recommending IBM at current levels on an expected bounce although traders should confirm that the market is not going to weaken further when trading resumes on Monday.

Word of caution, we would also like to point out that IBM had rallied past $105 and actually formed another support area there which held. Then the stock formed a double bottom, using $105 as a base, another bullish signal.

Now, as seen on Thursday, that area was violated and the stock also broke below its 50 day moving average. With that being the case, before initiating a long trade, we want to make sure IBM won’t continue pulling back and fall to its 100 day moving average around $99. So go long only if the market looks firm or is beginning to move to the upside.

July 3, 2009 | Filed Under Stock Recommendation, Trading Idea | Leave a Comment 

Trade Recommendation - Shanda Interactive

Wednesday May 20, 2009
Navivest

Shares of Chinese online gaming company Shanda Interactive Entertainment (SNDA) were up $4.31 to close at $53.78, a gain of 8.71%, yesterday, even as the overall market turned in a lackluster performance.

The stock hit a new 52-week high of $54.86, then plowed through that, to an intra-day high of $56.34, setting a new 52-week high.

While the stock’s action is rather bullish, we are looking for the shares to hit resistance at these levels, barring another huge rally in the market and the stock should pull back a bit over the next few trading days.

If the stock market is weak today, we are recommending shorting the stock or buying puts on it at current levels.

If market conditions are right for the trade, that is weakness in the markets and in the stock in early trading, buy the June 55 puts. They closed at $5.00 * $5.40. Look to take early profits, as the markets are highly volatile.

If shorting, short here between $53 and $54.50.

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May 20, 2009 | Filed Under Options, Stock Recommendation, Trading Idea, Uncategorized | Leave a Comment 

Trade Recommendation - IBM

Friday May 15, 2009
Navivest

Shares of IBM (IBM) closed at $101.05 on Thursday, down $1.21 from the close on Wednesday. The move down to the current price, puts the stock right at support levels and barring a strong downside bias in the overall market, the stock should bounce off this area.

We are looking for a move to $103.50 and possibly to $105, where there is some resistance, over the next couple trading days and are recommending traders go long the stock at current levels.

A move to $103.50 would be a 2% move and by buying the stock on full margin, return on capital would actually be 4%.

Enter the trade on Friday, if the stock market overall is bullish at the open and in early going.

May 15, 2009 | Filed Under Stock Recommendation, Trading Idea | Leave a Comment