The Technical Trader – Sterling Construction
Mar 17, 2010 Technical Analysis, Trading Idea
Sterling Construction
On Monday, before the stock market open, Sterling Construction (STRL) reported earnings that disappointed Wall Street. The stock gapped down, opening at $18.44, from a close of $21.15 the Friday prior and ended the session at $17.64. On Tuesday, there was further erosion of the company’s market capitalization, as the stock lost another $1.59.
On Wednesday, on an upgrade from KeyBanc Capital Markets, Sterling Construction rose $1.50 to close at $17.55, an incredible one-day gain of 9.35%.
With the turnaround, the stock is giving off some bullish technical signals, which could be a signal that there are some nice quick profits to be had in the shares. The $16 area is a key support area, which we did not want to see violated and while the stock did hit an intra-day low of $15.91 on Tuesday and $15.56 on Wednesday, the stock closed above this key area on Wednesday.
Sterling Construction may look to break above $18 and hit $19 near-term, which would be an 8% gain and while we would look for major resistance at $19, we may even see some more upside in a bullish stock market, as the stock looks to fill the downside gap created this week.
This would be a short-term play and a long trade should be initiated only if the stock is moving to the upside. Upon entry, we would look to take quick profits, exiting the trade on a 5% gain.
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