Real Money Charts – February 14th
GS, AGU, SPWR, MO. NBR, and CMP
GS is the “best of breed” in the financials. But the problem is that the breed is really out of favor. As such, GS has about as good a chance of getting “Best in Show” as Uno the Beagle does at surviving a weekend get together at Michael Vick’s house. But at some point, this breed is gonna lead and Goldman will be the best bet. As I see it, there are two ways to play this. First, we could buy at the bottom of the channel–like now! Second, we could wait until the stock climbs back above the 50-day moving average. At that point, the easy money will have been made…but there will still be plenty of room to run. The nice thing about trading is that you really don’t have to choose which approach to take. Instead, take a little bit now…and then wait for a climb above the 50-day moving average.
AGU has been bouncing on both sides of the 50-day moving average for a while, but the trend is decidedly higher. With the stock now right back up at the early February high, I’d look for more gains. It’ll take a while for the stock to challenge the December high, but I think it’s gonna do it.
SPWR appears to be completing a dramatic reversal pattern, The stock made a lower low in early February, but is now back above the 20-day moving average for the first time this year. If you bought this breakout, be alert for more backing and filling. After such a steep decline, the bulls usually require more than a few weeks to get their act together.
MO continues to bounce off the 30-week moving average. Ever since the breakout from that volatility squeeze in mid-2006, buyers at the 30-week moving average have done quite well. That’s where the stock is now, and you know what to do.
NBR has run from below $24 in late January to almost $32 now. That’s just $8…but it’s also 33%! That’s a big run in a short period of time. Because of this dramatic run, I’m a bit cautious about buying the stock now. But declining to buy doesn’t mean that it’s time to sell. Instead, if you’re long, just be cautious about a potential correction and keep a snug stop — or plan to buy more on a pullback to around $29 or $30.
CMP has gone parabolic and is up 4 of the last 5 days. With each close occurring outside the upper Bollinger Band, this is one incredibly strong stock. But notice how yesterday’s trading volume was just about half of the prior day’s volume. That tells me that the buying pressure is waning and that it’s time to take some off the table. While CMP might be a compelling buy at $45, it’ll be easier to buy it back then if you take profits now.
Be careful out there.