Real Money Charts – February 12th
MOS, ATVI, DE, ELN, TBL and SWC
The last time we looked at MOS was back in late December when the stock was consolidating at about $82. I noted that the next buy signal was on a breakout above $85…though the safest buy point would be on a pullback to the 50-day moving average. Well, it turns out that both of those scenarios played out. The day after my piece, the stock popped up above $85 on the way to $110. After that, it fell clear back to the 50-day moving average where plenty of buyers were waiting with open arms. So now where are we? I’ve got the same analysis. If the stock breaks above current resistance at $100, I’d be a buyer. But if it pulls back to the 50-day moving average (currently at around $87), I’d also buy.
I’ve been getting a lot of questions about ATVI, so here’s my take. The tock gapped up on strong earnings back in late December. Since that time, the new support level has held up nicely and the stock is now bouncing off the 50-day moving average. Still, plenty of supply looms overhead from all those eager bulls that bought the mid-December breakout above $27 and now wish they hadn’t. So as the stock climbs up toward $30, look for it to be slow going. I’d use a protective stop down below $25. The only way that stop gets hit is if the uptrend ends.
This weekly chart of DE shows a stock that just won’t quit. While we saw a nasty correction last month, the stock continues to print higher lows and is consistently above the 30-week moving average. I view this consolidation as healthy, particularly since the stock is now higher than the high-volume selloff that occurred in early January. Why? Because the only way that could happen is if all the aggressive sellers are finished. While there remains some resistance from the “I just want my money back” crowd who bought between $85 and $95, I think the stock moves higher from here.
This daily chart of ELN is rough to read. The stock has been all over the place, but is generally trending higher. Notice how the 50-day moving average is in an uptrend, and the stock is making higher highs and higher lows. I’d watch for a breakout above $26 now — with a stop just below current support.
TBL is trying to find a bottom at $15. The stock has been pounding away at that level since November and money flow is starting to perk up. I’ve drawn two trading scenarios. First, a buy right now, with a tight stop just below support, and a price target of $20. Second, stand aside and wait for a breakout above $20. The problem with this second scenario is that you’ve got to watch the stock climb more than 30% before you even act.
After bottoming at about $7.50 in January, SWC has doubled. That’s a big move in a short period of time, with just one short period of consolidation in late January. It’s always tough to ride these rocket ships for as long as possible without risking getting caught in the inevitable reversal. Try using an 8-day exponential moving average as the basis for stops. If the stock closes below that, it’s probably time to take the trade off the table.
Be careful out there.
Real Money