Real Money Stocks: February 29, 2008
These are the charts that will be featured on my RealMoney.com article today: FCX, CTRP, TNH, ANR, HOLX and LNN
I’ve drawn two horizontal lines along this daily chart of FCX to show the two relevant levels of resistance. The late December peak was around $105. The bulls are chewing through that right now. But the next level is the early December resistance — which looms just $3.50 higher. That makes it very late in the game to buy FCX. I’d be patient and wait for a pullback. Then I’d buy.
Yesterday I featured CTRP, noting that the best buying opportunity was on a breakout above $57.50. I received several emails during the day, asking if it was too late to buy CTRP. Well, with the stock up 14% and right up against the December high, I’d have to say it’s a bit late to buy. It’s often difficult to buy a stock right when it first breaks out because you may not trust it. But when the stock runs from $40 up to $57 in just more than a month, it pays to pounce on any sign of strength. What to do now? Wait for a pullback…then buy.
TNH looks like it’s just about done consolidating a massive gain and is ready to move higher. I’ve included the 30-week moving average in this chart, and that’s what I’d use for my stop reference. If the stock falls back below that key moving average, I’d sell.
This weekly chart paints a very volatile picture, with the deep dips stopping at the 50-week moving average. But two buying opportunities since last summer does not make it very appealing to say, “Hey, wait for the stock to pull back to the 50-week moving average.” You may not be able to buy until we have a new President. Instead, I’d just look at the congestion around $32.50 and $35 as a plausible entry. But either way, there’s just no way I’d be buying this stock now. It’s just too risky.
HOLX remains above the 70-week moving average. Why the 70-week moving average? Because that’s what fits! Every stock trades differently, so every stock needs to be analyzed differently. If the stock starts trading back below the 70-week moving average, then we know that the upside momentum is lagging and it’s time to sell. But until that unhappy day, it’s still a buy on dips.
LNN finally broke out above the December high. Notice how trading volume has increased with this breakout. That’s what you want to see during a strong move — a wide ranging day…on very heavy volume. Stocks can fall just because there are few buyers — they don’t need volume. But for stocks to continue to advance, they typically need to be accompanied by increasing volume because that reflects the requisite aggressiveness of buyers who are willing to reach up and take the offering price rather than wait for the seller to hit their bid. That’s what we see here. This is a bit tough to buy right now. If you’re long, why not try keeping a stop just below the breakout level?
Be careful out there.