Top 10 Trade Ideas for the Week of December 20, 2010

After looking at over 700 charts and posting my thoughts on many of them, I have found some good setups for the week. This week’s list contains 8 long ideas, 2 short setups and one play that could go either way, plus a secret Christmas double bonus. These were selected and should be viewed in the context of the broad market daily and weekly trend, reviewed Friday, which looks positive for Gold but with the short term potential to continue lower, and for Crude Oil to break the flag higher. The US Dollar Index is biased to the upside with a short term potential lower from the Hanging Man, while US Treasuries are biased lower, although have a little room higher before the turn. The Shanghai composite look to rally off of support higher but emerging markets look to meander higher. Volatility is headed lower still but has little room before strong support. Equities look to be flat to a small pullback short term but all appear better to the upside longer term. From the Sector Review the best sectors are rotating from the Energy and Consumer Discretionary sectors to Consumer Staples and Health Care.

(As always you can see details of these individual charts and more on my twitter feed and on chartly.)

Here are the top ten for the week in alphabetical order:

1. American International Group, Ticker: AIG

AIG stormed out of both a long symmetrical triangle and a channel, recently breaking and holding above support at 50, with the support of a Bollinger band squeeze. The next resistance level is 55. After that 60 is the target of the channel break out on a measured move and then 75 is the target for the break out of the Symmetrical triangle. The Moving Average Convergence Divergence (MACD) indicator is rising and the Relative Strength Index (RSI) is strong adding to the chance of a further move up.

2. Activision Blizzard, Ticker: ATVI

Activision is in a bull flag after breaking out of the smaller symmetrical triangle. This flag is right at the resistance of the larger symmetrical triangle near 12.30. If it can get over 12.40 then the next resistance is at 12.84 from August 2009, before it can head to a target of 15.50. The Simple Moving Averages (SMA’s) are rising to help out and the RSI seems firmly over 50 now. A stop could be placed near 12.00, recently support.

3. BioCryst Pharmaceuticals, Ticker: BCRX

BioCryst is breaking out of a symmetrical triangle and near a previous resistance area at 5.55 to 5.60. If it can get trhough that resistance then the 200 day SMA at 5.95 might slow it down before reaching the target off of the pattern at 6.5. A stop could be placed at support near the triangle break out at 5.30.

4. Deere & Co., Ticker: DE

Deere moved off of the base near 74 and is now in a bull flag. If it can break the flag higher, over 82.50 then the target on a measured move is 90. The gap below the bottom of the flag at 80 can be used as a stop.

5. Endo Pharmaceuticals, Ticker: ENDP

Endo had a big down day Friday that in many ways indicates that the down turn is just beginning. The long red candle fell through support at 35 that has held since the beginning of November, the RSI rocketed through 40 suggesting the bull trend may be over, and the MACD added substantially to its negative position. This looks to be a good short to 32.47 support at the bottom of the gap up and possibly further to close the window at 30.67.

6. International Business Machines, Ticker: IBM

IBM rose out of the long 9 month channel between 121.77 and 132.61 and reached its target of 143 in November. It has since been in a higher bull flag or channel and with a rising 50 day SMA giving the bottom of the channel a push looks primed to break it higher. If it gets over 146 the target on the smaller channel break would be 151 and then look for 158 on a measured move up to the flag repeating. The 50 day SMA is a good place for a stop.

7. Intersil, Ticker: ISIL

Intersil is in a bull flag after a strong move off of the 200 day SMA and the flag appears to be at the bottom and turning. If it continues then resistance is found at the top of the flag at 15.50 and then 16.50 from April before heading to a target of 18.50.

8. Origin Agritech, Ticker: SEED

Origin Agritech broke out of a long basing area earlier this month and is now retesting the break out level at 9.40. If it holds then look for a rebound to 10.25 and 10.50 are the targets.

9. Take-Two Interactive, Ticker: TTWO

Take-Two Interactive blew up Friday into a Shooting star out of a bull flag. Volume was relatively high for this move and the is a significantly long upper shadow. Look for a fall back to 12.40, the top of the flag, or even 12, the origin of the jump higher.

10. Vulcan Materials, Ticker: VMC

Vulcan Materials offers up a two for one idea. It is in a bull flag, and the expectation would be for a continuation higher out of the flag, over 47.50, which would lead it to resistance at 50 and then a target 52. But with the RSI falling there is potential for the flag to tail lower first, like Intersil above, and if so, under 46, it could find support at 43.63, the 200 day SMA.

Bonus Idea: Mastercard, Ticker: MA

Mastercard got hammered on Thursday on news and fell a bit further on Friday, but ended up printing a bullish hammer candle. The bottom of the shadow of that candle held support at the top of the past channel at 217. It also fell out of the Bollinger bands. If this holds early Monday then look for a move higher to 226.11, the 200 day SMA, at least and through there to resistance at the 233 to 235 area. Support around 220 would be a good place for a stop.

Trade’m well!

Merry Christmas!

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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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