Top Trade Ideas for the Week of July 25, 2011: The Rest

• Posted by Greg Harmon
• on July 24th, 2011

Here are the Rest of the Top 10:

Abraxas Petroleum, Ticker: $AXAS

Abraxas Petroleum, $AXAS, is in a bull flag after breaking higher from a previous bull flag. If it can get over 5.20 then it has resistance at 5.50 followed by 5.75 and then 6.10. The Relative Strength Index (RSI) is elevated but not extended and the Moving Average Convergence Divergence (MACD) indicator is large. It also has large short interest at over 20% which could push it higher quickly if short covering were to occur.

CME Group, Ticker: $CME

CME Group, $CME, is leaking lower in a bearish wedge. The MACD has crossed negative and the RSI is trying to hold the mid line. if it gets under 284 it has support at 279 followed by 275 and then 265 and 260. It has earnings on July 28th before the open, so make sure you protect any gains by then or perhaps play this with a August 280/270 or 280/260 put spread, which closed at 2.90 and 4.30 on Friday.

Mortons’s Restaurant Group, Ticker: $MRT

Mortons’s Restaurant Group, $MRT, is testing the top of an expanding wedge for the fourth time since late May. As it hits there this time it does so off of a near Marubozu candle Friday and with support of a steeply sloping RSI and a MACD that has just crossed positive. If it can get over 7.75 it has a has Measured Move (MM) to 9, as big as the potatoes they serve. Earnings are released after the market closes on July 28th.

Rambus, Ticker: $RMBS, Ticker: $RMBS

Rambus, $RMBS, took a header in mid May and spent more than two months recovering before breaking higher on Friday. As it approaches the plunge close at 15.83 it has support from a rising RSI and a positive and increasing MACD for more upside. Beyond 15.83 it is heading to resistance at 17.23 and then 18 and 18.65 higher. It is out of the Bollinger bands so it may pullback or consolidate first but they are expanding to allow for upside. It also has high short interest around 10% that could lead to a short covering squeeze if it get momentum to the upside.

World Acceptance, Ticker: $WRLD

World Acceptance, $WRLD, has been in a channel between 60 and 68.75 since mid March and is now testing the top rail. If it can get over 68.75 then it has a MM to 77.50. The MACD supports more upside but the RSI seems to be rolling lower. There is a catalyst though as earnings are being reported prior to the open on July 27th. It also has high short interest at near 25%. This could be played with a bullish call spread. The August 70/75 Call Spread closed at $2.05, limiting the downside, but the options are pretty thin. If you are willing to own the stock at 60, the bottom of the channel you could sell a 60 Strike Put for at least 30 cents to finance the call spread.

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The Best

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

After reviewing over 800 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Saturday which looks for the move higher in Gold and Crude Oil to continue. The US Dollar Index and US Treasuries conversely are set up to move lower, with a chance of Treasuries just running in place. The Shanghai Composite and Emerging Markets look as though they may test the top of their consolidation ranges. Volatility appears to remain muted and allow for the Equity Indexes SPY IWM and QQQ to continue to test higher and perhaps break their consolidation ranges, with the QQQ already making a new high. Use this information to understand the major trend and how it may be influenced as you prepare for the coming week ahead. Trade’m well.

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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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