In reviewing some screens tonight, I ran across three stocks that had pretty decent looking charts, yet were unfamiliar to me. While I recognize the tickers for a couple of these, I can't remember ever trading these or even adding them to my watchlist. Sometimes these unknown stocks can move well if you catch an institution sneaking in, but they also come with their caveats. Each of these are fairly light on the volume side, so getting in or our is not as easy as in the more liquid stocks.
The Cooper Companies, Inc. (Public, NYSE:COO) is in a base right now but appears to be finding support at its 20-day moving average. This stock held up very well throughout the recent weakness and could be setting a higher low here. This might provide a good entry for a retest of the top of the base and with any luck a breakout above $42.
RAM Energy Resources, Inc. (Public, NASDAQ:RAME) is another stock still trading in its base, but also appears to be ready for a retest of its recent highs and the top of its current base. If RAME could pull the breakout off, the measured target would take it to over $3 per share.
Loral Space & Communications Ltd. (Public, NASDAQ:LORL) is another one that looks pretty nice here. It cleared a base March and rallied about 10 points. Although it came back for a full retest of support, it did hold near the breakout level and has been steadily rising through the past few weeks of market weakness. It might come back in for more consolidation, but its definitely worth watching.
One common factor across these three stocks is that they are all technically still in a healthy consolidation. They are not beaten down with the markets and they are also not too extended where your risk reward ratio would be unattractive. While the markets are no where near being out of the woods, today's bounce could lead to more upside over the next few weeks. If the markets can stabilize, I would rather focus on stocks like these than stocks that have an over abundance of trapped longs.
Good Trading,
Joey
The past few weeks have been one of my least active string of weeks as far as swing trading goes in the past year to year and a half. While the markets have presented ample day trading opportunities, I've found that I've only found a few 1-3 day windows in the past 2 months worth attacking. I'm sure long time followers on my twitter account have noticed my decreased updates, and this is directly related to simply not seeing that many attractive opportunities. However, despite knowing I would be unlikely to initiate new swing positions the next day, I have still been faithfully reviewing my typical 300-500 charts per night and running through hypothetical trading scenarios to try and build a trading thesis for the following few sessions. Sometimes I will play devils advocate with myself and build the case against a thesis to see where I will call the thesis invalid.
The reason I am mentioning this is I think its very important for traders to remain open minded objective when preparing for the markets. I often see traders fixated on a side of the market and this leaves them very vulnerable to being blind sided. The markets are not always rational and even if you're right, it could take weeks or months for the markets to agree. The best traders prepare for multiple scenarios and then react to the markets. Instead of attacking the markets at the open with preconceived trades, why not build a couple lists and wait to see if the markets confirm any of them. With that in mind, here are a few thesis' I have been running through and will be watching in the markets:
- With the markets seemingly fixated on a weakening economy again and possibly pricing in deflation, I am looking to the consumer discretionary sector as a possible target on the short side. In fact, I wrote an article on the recreational vehicles group on Monday night that has a few weak looking stocks.
- Another thesis I have revolves around some oil stocks that have held up well through the recent weakness in the group. With the markets oversold and this group coming off several weeks of selling, its possible that they could get a short squeeze in their favor soon. I wrote an article tonight on this thought and it should be published by tomorrow afternoon on Chart Advisor. Some stocks to look at include CLB and CRR.
- One thesis I had been working with was rising gold and silver prices and while that looked promising, I have to admit it looks like it may need more time or simply not happen. However, I continue to monitor this group and remain open minded to either scenario.
Good Trading,
Joey
