Set the Alarm For Tyco

Tyco, $TYC, started looking good for a trade to the long side in late January as it consolidated under the resistance at 41.75. It fell back and moved off the radar until this week. It is right back at that resistance. A push through it higher carries a target to 44 and it has a Relative Strength Index (RSI) that is bullish, near 60 and a MACD that has crossed up. Finally the accumulation/distribution statistic is at highs. These support a push higher. But what makes this stock more interesting this time at resistance is that Wednesday it printed a bearish engulfing candle. This can confirms reversal if the price closes lower Thursday. So now there are two ways to potentially trade this stock. A technician could make a case

tyc

for the downside trade as well. The RSI is in bullish territory, but it is flat and a rollover supports the downside. The acc/dist is also flat and would support downside movement with a rollover. And the volume on the latest up leg was decreasing, a sign of weakness. Does this mean Technical Analysis is crazy and just plain dumb? Of course not. TA gives a indication of where prices may move to or find support or resistance, but does not predict that a move will happen. So what do you do? Wait. Wait for a trigger over 42 to trade ti higher or under 41.15 to trade it short. Until then, set your alarm.

Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades from Amazon.

Want to learn more about Dragonfly Capital Views?

Dragonfly Capital Views Performance Through January 2014 Expiry and sign up here for the free 7 day trial before you pay.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

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.

blog comments powered by Disqus
Dragonfly Caps Blog