February 8, 2008
Today’s stock coverage on Real Money includes: ISRG, MSFT, MHK, TM, WFC and GDI
ISRG had been the shining light of 2007, moving higher in a steady uptrend. But since peaking in December, the ISRG bulls were looking for a break. They got it last week when the stock broke above resistance and is now trading in a 10% range. I’d be a buyer on a breakout…and would keep a stop just below support.
Well, I guess we know what Wall Street thinks about MSFT’s attempted acquisition of Yahoo! Not much! If the bulls don’t step up at $28, they might stay on strike for another $6. Don’t buy! Don’t buy!
MHK continues to bump against $82.50 but is now doing it from above the 50-day moving average rather than below it. As such, I’d look to the 50-day moving average to be support on any pullback now. And I’d be a buyer on a breakout above $82.50.
I’ve received a lot of emails from folks who are bullish on TM, wondering where the best buy point is. Well, TM has been making a series of lower highs and lower lows for a while, so the best time to buy it is when it makes a HIGHER low. I’d be patient and wait for some weakness…then I’d look to buy if it firms up around $102.50. If it falls much below that, I’d dump the car in the nearest alley and walk away.
Since falling below $34 last October, WFC continues to be overwhelmed by supply each time it returns to that level. Until that changes, I wouldn’t want to own WFC. But this latest pullback to support might offer the bulls a favorable entry, with a tight stop just below $29. That way, you can be a seller at resistance rather than an eager buyer who is trading on hope.
GDI is yet another stock that’s making lower highs and lower lows. (Are you seeing a pattern here?) The 50-day moving average has been defining resistance on the rallies, but that dynamic may be changing. With the stock right at the 50-day moving average, the downtrend could be about to change…or it could be confirmed. Everything depends on the next move. If GDI breaks down from here, I’d close the trade out below $30. If it falls lower than that, I just wouldn’t want to be long.
Be careful out there.