Today’s trade of the day features another cup with handle base. Falconstor (FALC) is a company with not only a great looking stock chart but with great fundamentals making it a potentially good longer term play. The stock first broke out on September 18th with very heavy volume and on that day offered the first entry point. The very next day the stock cleared multi year highs above 12.28 and is now digesting those gains with light selling volume. I don’t expect this stock to stay down for long.
I haven’t featured too many cup with handle bases in the trades of the day segment, but they are one of most successful chart patterns in a strong market. On such cup with handle chart that has caught my eye recently is ASYS which has carved out a short but very bullish looking cup pattern and today is breaking out of the handle formation and briefly touched all time highs before pulling back. Looking at buy vs sell volume ratios, all indications point to further gains from here.
Following a short reprieve from highlighting short trades, where I highlighted a great looking long trade in HMSY, I return today to anothe great short opportunity.. this time in Ashland (ASH). The stock has carved out a classic short trade setup where the stock takes out key support levels with huge selling volume, followed by a weak bounce up to test new resistance. The short entry occurs when sell volume begins picking up again to the downside, just as it did on Monday. The stock has pushed higher over the past two days but I think that just offers an even better entry for this outstanding looking short trade.
It’s been awhile since I’ve featured a trade on the long side due to increasing risk there, but couldn’t pass up this gem in HMSY which is breaking from a bullish triangle formation with volume today. This formation is up in all time highs territory and a break above 25.40 would be an all time high. Doesn’t get too much more bullish than this. Tread lightly with long trades here though.
Since there have been few posts in the last couple weeks during my vacation I thought I’d come at with you with not one but two great looking short plays. I know it’s exciting but please to try to contain yourself. First up is CHRD, a stock that broke down with record selling volume in mid August and has since retraced some of that move and is now meandering along resistance of the 50 day moving average. Notice there is a bit of a bearish triangle formation there. I want to see this stock go from meandering to making a definitive move from this sideways action. That ALWAYS mean another spike in selling volume and will probably mean it takes out the triangle formation somewhere around 14.40 (or today’s lows). There isn’t any support until around 12.50 so that would be a nice short trade if it can break down from here.
Next up is UNTD, which has carved out a similar path but over longer time frames. It’s amazing to see how it dropped 14 of 15 days in late July/early August. It’s no suprise that the stock has bounced back from those oversold conditions. When I look for good short positions I want to see diminishing volume levels on these retracements after a big sell off and that’s exactly what we see in UNTD. I also want to see it retreat from resistance levels, which we also see around the 50 day moving average. From here, like in CHRD, I want to see selling volume come back into the stock which would probably be indicative that the stock is ready to resume the trend down.
I continue to believe that the big money will be made on the short side over the next few months so I’ll focus on these trades more often. Today’s trade of the day is a short opportunity in Centurytel (CTL), a stock that took out support of the 200 day moving average with record volume on Thursday and Friday of last week but has been getting bounce, returning to test what is new resistance at the 200 day moving average. This retest offers a nice short entry between 45 and 46.
Disclaimer: I have initiated short trade in CTL today.
Today’s trade of the day features one of my favorite chart patterns – the bullish triangle formation which is characterized by a few days of near record volume buying followed by tight consolidation where price gets squeezed to a point with diminishing volume. The result is often a breakout in the direction of the previous trend which in this case is up, up, up. Basin Water (BWTR) is breaking from this very bullish formation today with decent volume.
I featured a Trade of the Day short opportunity a few days ago in Transcend Services (TRCR) and it’s up nearly 10% since. An equally promising short opportunity has emerged in CGI Group (GIB) after the stock broke down below its upward trend and 50 day moving average support areas with record sell volume. The stock is bounced a bit yesterday and was turned away at resistance of the 50 day moving average today, creating a nice short opportunity.
Disclaimer: I do not have a short position in GIB at this time.
In past Trade of the Day posts I’ve highlighted opportunities on the long side, but given current market conditions I though I’d highlight a potential short set up. TRCR took out support of the 50 day moving average recently with heavy volume and has made its way back to this new resistance level with diminishing buy volume which makes it a potentially strong short candidate. I don’t have a short position in it yet but may consider one soon.
