RealMoney: February 21, 2008
The following charts will be featured in tomorrow’s article on RealMoney: RIO, PCU, XTO, CALM, JEC, and CELG
RIO has been in a steady uptrend for the last month and is close to challenging its 2007 highs. But with resistance so close, this isn’t the time to buy. I’m not saying that the stock is going to sell off — just saying that if you’re buying now, your potential reward is questionable compared to the risk. I’d be patient on RIO.
PCU isn’t much different than RIO. The bulls are climbing back up to test a prior resistance level and the stock is pretty overextended. I’d wait for the bulls to prove that they have enough demand for the stock to push it up to $120. That’s when I’d look to buy. But first, I’d want to see the stock churn a bit because it’s run quite a ways without much letup. That makes it ripe for profit-taking.
This weekly chart of XTO shows a stock that’s right at the top of its trading range. Frankly, that’s not the time to buy…it’s the time to take some profits. If you’re looking to buy, then try waiting for a pullback to around $50 or $52. That’s closer to support.
Yesterday CALM broke through the early February high on twice average volume. That’s a textbook breakout that begs to be bought. If you’re long, try protecting the position with a stop just below $28. If this breakout is real, there is no way that potential buyers will allow any pullback to fall below that level.
JEC broke down from an established trendline right at the 50-day moving average. Now, the stock is consolidating within a symmetrical triangle. That’s typically seen as a continuation pattern, so we’ve got to have a bearish bias. I’d be a seller if the stock breaks below support. And even if it moves above resistance, I’d still be hesitant to buy until it clears the 50-day moving average.
CELG is flashing a pretty nice sell signal. After trying to climb back above $60, the stock has rolled over and is now moving lower again. If you’re short, try keeping a buy-stop just above $60. That way, you’ve got your risk contained within a reasonable level.
Be careful out there.