Loading Guns Ahead of the State of the Union Address

• Posted by Greg Harmon
• on February 11th, 2013

There have been horrible tragedies involving guns over the years, the most recent in Newtown Connecticut. These inevitably lead to a call for gun control. And it is expected that the President will make another such a call in the State of the Union Address Tuesday night. Common wisdom is that true gun control would be bad for the gun stocks. So what are they doing post Newtown and leading into the State of the Union? Not what you might think.

Sturm Ruger, $RGR

Sturm Ruger, $RGR, is back testing all time highs at 55.60. A strong uptrend, that is seeing a pullback Monday touch the 20 day Simple Moving Average (SMA). The Relative Strength Index (RSI) is also pulling back after touching the technically over bought level at 70. Is it a true Double Top, or just a healthy pullback in the uptrend that has become extended from the SMA’s? Of course if it goes down again tomorrow the speech will be put forth as an excuse, but the technicals suggest a pullback and hold at 50 would be a good entry or on a move to new highs.

Smith & Wesson, $SWHC

Smith & Wesson, $SWHC, is also in an uptrend but in a bit of a healthier spot at the moment. This could turn into a bear flag and head lower but for the moment it creeps higher in a step fashion with 9.25 as resistance overhead in an ascending triangle pattern. Should it break over the top it has a target of 10.25. The RSI is trending higher and the MACD is positive, both supporting more upside. Use a breakout as a long entry.

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Dragonfly Capital Views Performance Through January 2013 Expiry

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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