DQ TAN 

I want to look at Daqo New Energy ( NYSE: DQ ), this is a solar stock. And as you probably know, solar ( NYSEARCA: TAN ) basically got whacked today on news that the green new “steal” is not going to be happening, for various reasons. You can read that in your local rag, as far as why.

But all of these solar stocks sold off hard and then they rebounded. I’ve got several of those stocks that I am covering in our Strategy Session for Monday. One of them I wanted to share with you guys here is this stock ( NYSE: DQ ) and here’s why. Because if you look at the way this stock traded today, this thing just really got crushed with everything else, down almost 13 percent in the blink of an eye, if you’re blinking slow. It was way down below the volume-weighted average price and then it starts doing this.

Now, because you knew what was happening. All the stocks ( NYSEARCA: TAN ) were doing the same thing and so you could actually buy with more confidence. But let’s say that it was just a singular stock as opposed to an industry-wide thing. Maybe it was bad earnings or something like that.

So the way that you would trade this ( NYSE: DQ ), you wouldn’t catch most of the move. But this is a way that you could trade it with a really, really, high degree of certainty. First of all, if you were really quick you buy it on the first open green candlestick here. And then you buy more on this kind of pullback, that is if you are going to hold through a 3 percent pullback, but maybe you do. And then you are buying more and doing this.

But the safer way would be, this is the volume-weighted average price, you know it will pull way down there because there is so much volume here. Then it tapers off here, but then finally right here at 11:40 this trades above the VWAP and then never comes back below it. Right here in this area here is where it becomes a really, really safe trade. Right here as this hits the VWAP and doesn’t pull back, that is the safe trade.

If you look at what was happening everywhere else, TAN ( NYSEARCA: TAN ) was already well ahead of that, other stocks were as well. But this stock ( NYSE: DQ ) is where you are making, again, the safe trade. And you can say, well, I would have bought earlier than that. Fine, sure, I probably would have too, and then I would have watched it like a hawk.

But what I am talking about here is just the easy trade, the trade that you make when you know that the bulls are in charge. So do I think this stock will go up on Monday? Here’s what I am looking at, 67.30, that’s today’s high. If the stock eclipses that, yes I would look for that kind of move, yes I would. I don’t think it is going to be the trade of all trades but it is probably going to make you money.

LLY MRK 

This is Scott with your Chart of the Day. I want to take a look at two drug manufacturers, as drug manufacturers have really held up well throughout this last couple of weeks.

You can see Eli Lilly ( NYSE: LLY ), here on the screen, is above all the key moving averages. If I look at MRK ( NYSE: MRK ), which I saw was mentioned on CNBC a couple of days ago, it too is above some key moving averages here. So I think these are definitely stocks you want to watch.

MRK ( NYSE: MRK ), has a nice base of consolidation right here. Coming up to a previous resistance zone. I think you will want to watch for a move through that 94.75 zone, coming on volume.

And LLY ( NYSE: LLY ) caught my eye today because we ended up having higher than average volume. A nice move right off that 21-day exponential period moving average. At this point, it is a little extended based on today’s individual move.

And so I would probably want to watch this consolidate a little more, maybe print a few inside days. And then move above and close above that 331.00 level coming on higher than average volume. So maybe have an alert just below the pivot, maybe around 331.48. And then you will want to see a strong close above that level coming on higher than average volume.

Now, neither Merck ( NYSE: MRK ) or Eli Lilly ( NYSE: LLY ) have earnings this month and so that is good to know. So you have a little time if you are looking to swing any of these stocks.