Top Trade Ideas for the Week of August 14, 2011: The Best
- Posted by Greg Harmon
- on August 14th, 2011
After reviewing over 900 charts, I have found some good setups for the week. This week’s list contains the first five below to get you started early. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Saturday which looks for next week to be a reversal of this past week. Gold looks heading lower while Crude Oil has a short term bias higher in a downtrend. The US Dollar Index looks to continue sideways in the 73.50-76 range, while US Treasuries look to continue lower in an uptrend. The Shanghai Composite and Emerging Markets look to be headed higher. Volatility looks biased to the downside with a move under 34 key to continuing lower, and giving a bias to the upside for the Equity Indexes SPY, IWM and QQQ, also within a downtrend. the big question looks to be whether this is a dead cat bounce or for real. Use this information as you prepare for the coming week and trade’m well.
Here are the first 5 ideas for the week, to get you started:
Chiquita Brands Intl, Ticker: $CQB
Chiquita Brands has moved off of its bottom and is into the thin long red candle down. It has a Relative Strength Index (RSI) that is moving higher and a Moving Average Convergence Divergence (MACD) indicator that is improving. Using 9.75 as a stop, this can be traded long to resistance at 11.10. If it can get through 11.10 then the next resistance higher is at 12.00. Short interest is near 10% so a move higher could also trigger a short squeeze.
Lear Corp, Ticker: $LEA
Lear also moved higher off of the bottom and is now at resistance near 46.16, a previously important level from November and December 2010 and April this year. As it reaches resistance the RSI is moving higher and the MACD is working towards a cross. If it can get through 46.16 then it has resistance higher at 47.67, the support area from May and June, and then 48 and 50 higher.
Sky-mobi Ltd, Ticker: $MOBI
Sky-mobi printed a very large bullish engulfing candle on Friday. Its RSI has moved strongly higher and the MACD is improving. It has resistance higher at the 7.04 level from January and June, and then the resistance area between 7.86 and 8.04 above that. Through that area it has resistance higher at 9.00. A stop can be placed at 6.03 or that level used as a trigger to go short with a target of 5.50. It reports earnings August 22nd and short interest is moderate at 4%.
STAAR Surgical, Ticker: $STAA
STAAR Surgical broke above the descending trend line Thursday and held there at previous resistance from July 2010 at 6.74. There are two areas of support, one at 5.00 and the second at about 4.50 that create a descending triangle out of the trend line. These lead to a target on a Measured Move (MM) of 7.90 and 8.40 if it can get over the previous high. The RSI and MACD are strong and both support more upside. Short interest is elevated at 5% which may trigger a squeeze adding to the upside potential.
Walter Industries, Ticker: $WLT
Walter Industries is coming off of its bottom with a rising RSI and an improving MACD. What makes it interesting is that it is now into the long red candle from the gap down with relatively light resistance from the long move higher in the channel in late 2010. Using 79.50 as a stop, this can be played long with resistance at 84 followed by 89.40, 90 and then 98 higher. Adjust your stop higher as it passes through these resistance levels.
Up Next: The Rest
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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