Todays Big Stock: Globe Specialty Metals Inc. (NasdaqGS: GSM)

The markets have dropped drastically over the past several weeks and for a while it seemed like they would never stop dropping. For now, maybe they have. I believe that in all likelihood a rally probably started yesterday. However, if the market has started to move higher, it may be short lived. If you missed out on entering short opportunities when the sell-off started, you may want to look to rallies for a 2nd chance.  One stock worth watching would be GSM (Globe Specialty Metals, Inc).

Globe Specialty Metals, Inc. is a producer of silicon metal and silicon-based alloys. The company operates in six segments: Globe Metallurgical, Inc. (GMI), Globe Metais Industria e Comercio S.A. (Globe Metais), Globe Metales S.A. (Globe Metales), Solsil Inc. (Solsil), Corporate and Other. On April 1, 2010, the Company purchased all of the ownership interests in Core Metals Group Holdings LLC (Core Metals).

Please take a look at the 1-year chart of GSM (Globe Specialty Metals, Inc) below with my added notations:

GSM had formed a major support level at $20 (red) over the course of this year. Unfortunately, GSM broke that $20 level earlier this week and the stock moved lower as expected. When the market does finally rally, GSM could make its way back up to the $20 level. The $20 level was important when GSM was above it and it should be just as important now that GSM is below it.

On any moves lower, it is worth noting that GSM had previous levels at $18 and $16 (green) as well. These levels could provide future entry points for trades if GSM retests those levels.

The Tale of the Tape: After holding $20 as support for the past 6 months, GSM broke down through that $20 level.  When GSM finally moves higher, the $20 level should act as resistance if the stock gets there. From there, GSM should move lower again, thus a trader would might want to enter a short position with a stop above $20. A break back above $20 would negate the forecast for a move lower.

Side note: If GSM were to pull back down to $18 or $16, a short-term long trade could be entered in preparation for a move back up to the $20 resistance.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT

Todays Big Stock: Kinetic Concepts, Inc. Common S (NYSE: KCI)

With the stock market having lost close to 20% in a couple of weeks the perception would be that everything is trending lower. Although I have yet to find any stocks that haven’t had a terrible week or two as of late, I do think there are a few stocks still maintaining an overall trend higher. Stocks that have maintained their trend higher through the current market sell-off will most likely be the ones that rally strongest when the market finally does rally. One such stock that may fit that description would be Kinetic Concepts Inc. (KCI).

Kinetic Concepts, Inc. is a global medical technology company, which is engaged in the discovery, development, manufacture and marketing of therapies and products. Kinetic’s primary business units serve the advanced wound care, regenerative medicine and therapeutic support systems markets. Kinetic operates in three segments: Active Healing Solutions (AHS), LifeCell and Therapeutic Support Systems (TSS).

To review Kinetic Concept’s stock, please take a look at the 1-year chart of KCI (Kinetic Concept, Inc.) below with my added notations:

Although KCI has sold off like all other stocks over the past few weeks, the stock has continued its overall trend higher regardless. After having a rough day yesterday, KCI still managed to hold its level of $60 (green). Obviously, if the market continues to sell-off, KCI may break its $60 level thus paving the way for lower prices for the stock. In the situation where that occurs, $55 would be the next potential level of support (purple) for KCI.

The Tale of the Tape: As hard as it is to believe, KCI is currently still in a trend higher. KCI also has an important level at $60. A long position could be entered at $60 with a stop below $60. If KCI were to break below $60, a trader might want to enter a short position with a stop loss set above $60 expecting a drop down to the next level of $55. Another long trade could be made at the $55 level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT

Todays Big Stock: V.F. Corporation (NYSE: VFC)

As with last week, the market is still having a pretty rough go of it to start this week. Most, if not all, stocks are continuing to break lower. Like any other sell-off though, it won’t last forever. The lower we go the more likely that we are getting closer to at least a short-term bounce rather than towards another week or two of selling, although anything is possible in the stock market. In preparation for a potential rally, I believe that now would be a good time to start searching for stocks that may be approaching lower levels of support. Even better might be a stock that has held an up trend. One such stock that seems to fit that description would be that of VF Corp.

V.F. Corporation (VF) is a global apparel company based in the United States that designs and manufactures a variety of apparel and footwear for all ages. VF owns a portfolio of brands in the jeanswear, outerwear, packs, footwear, sportswear, travel gear, backpacks & technical outdoor equipment, and occupational apparel categories. These products are marketed to consumers shopping in specialty stores, upscale and traditional department stores, national chains and mass merchants. Products are marketed primarily under VF-owned brand names, but VF’s business segments include Outdoor & Action Sports, Jeanswear, Imagewear, Sportswear and Contemporary Brands.

To review VF Corp’s stock, please take a look at the 1-year chart of VFC (VF Corp) below with my added notations:

VFC has continued to trend higher throughout most of the last year, which is a bonus when compared to most other stocks, and the stock has usually demonstrated important price levels at each increment of $10. Most recently, VFC has a potential area of support at $110 (green) and a resistance level at $120 (red). You can also see how early in the year VFC had levels of importance at other aforementioned increments of $10 (purple) as well. Since VFC has been moving lower along with the overall market, the level of $110 is now coming back into play and should try to hold as support. However, if VFC were to break below the $110, the $100 level would be the next potential level of support.

The Tale of the Tape: VFC has maintained a decent trend higher throughout the market’s recent struggles. VFC has also formed common areas of support and/or resistance at each increment of $10, most recently at $110 and $120. If VFC continues to pullback to the expected $110 support, a long position could be entered with a stop loss set below $110. If BKE were instead to break below $110, one might enter a short position with a stop set above $110, expecting of a drop down to the level of $100. If VFC gets to $100, a new long position could be entered.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT

Todays Big Stock: M&T Bank Corporation Common Sto (NYSE: MTB)

At this point, a rally couldn’t come soon enough. The markets have dropped drastically over the past several weeks and they don’t seem to want to stop dropping, but they will. When? Tough call. However, when the market does rally, it may be short lived. If you missed out on entering short opportunities when the sell-off started, you may want to look to rallies for a 2nd chance.  One stock worth watching would be MTB (M&T Bank Corp).

M&T Bank Corporation is a bank holding company. Through its subsidiaries, M&T provides individuals, corporations and other businesses, and institutions with commercial and retail banking services, including loans and deposits, trust, mortgage banking, asset management, insurance and other financial services. M&T operates in six segments: Business Banking, Commercial Banking, Commercial Real Estate, Discretionary Portfolio, Residential Mortgage Banking and Retail Banking. M&T Bank has approximately 740 domestic banking offices located throughout New York State, Pennsylvania, Maryland, Delaware, New Jersey, Virginia, West Virginia, and the District of Columbia.

Please take a look at the 1-year chart of MTB (M&T Corp) below with my added notations:

MTB has formed (2) very important levels over the course of the year. The first would be the $90 resistance (d. red) and the other would be the very common level of $85 level (green & red). The $85 level has acted as both support and resistance over the entire year.  During the last 7 months, these (2) levels have worked together to create a common Rectangle chart pattern. Like most stocks, MTB broke its key level of $85 and did what one would expect: It went lower with the rest of the market. When the market does finally rally, MTB could make its way back up to the $85 level.

Chart patterns can also provide price targets. Simply take the height of the overall pattern and add or subtract that amount to or from the breakout or breakdown points to get the minimum price objective. For example, since the Rectangle pattern for MTB is $5.00 high ($90 – $85), MTB should fall to a minimum of $80 ($85 breakdown point – $5 pattern height) now that it has broken lower. Chart pattern price targets are certainly not guarantees, but they are often fulfilled.

The Tale of the Tape: After being stuck in a 7-month Rectangle pattern, MTB broke down through its $85 support.  When MTB finally moves higher, possibly after hitting $80, the $85 level should act as resistance. From there, MTB should move lower again, thus a trader would might want to enter a short position with a stop above $85. A break back above $85 would negate the forecast for a move lower.

Side note: If MTB were to break back above $85, a long trade could be entered for a move back up to the $90 resistance.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT

Todays Big Stock: Buckle, Inc. (The) Common Stock (NYSE: BKE)

As you know, the market has had a relatively rough go of it over the past couple of weeks. Most, if not all, stocks have broken key levels and moved significantly lower. However, sell-offs generally don’t last forever. The odds seem to favor that we are getting closer to at least a short-term bounce rather than towards another 7-10 days of selling, although anything is possible in the stock market. In preparation for a potential rally, I believe that now would be a good time to start searching for stocks that may be approaching lower levels of support. One such stock that seems to fit that description would be that of Buckle, Inc.

The Buckle, Inc. is a retailer of casual apparel, footwear, and accessories for both men and women. Buckle currently operates around 420 retail stores in 41 states throughout the continental U.S. under the names Buckle and The Buckle. Buckle offers denims from brands such as Big Star, Big Star Vintage, Miss Me, MEK, Rock Revival, Silver Jeans and Buffalo Jeans. Other brands include Hurley, Billabong, Affliction, Sinful, Archaic, Obey, Roar, RVCA, Fox, and Fossil. The Buckle, Inc. purchases products from manufacturers within the United States, as well as from agents who source goods from foreign manufacturers.

To review Buckle’s stock, please take a look at the 1-year chart of BKE (Buckle, Inc.) below with my added notations:

As you can see, BKE has continued to trend higher throughout most of the last year, which is somewhat of a bonus compared to most other stocks. In addition, BKE has created important price levels at $40 (d. green) and $35 (l. green) over the last 8 months. Since BKE has been moving lower along with the overall market, the level of $40 is now coming back into play. This $40 level should act as formidable support as it did back in May and June. However, if BKE were to break below the $40, the $35 level would be the next potential level of support.

The Tale of the Tape: BKE has maintained a decent trend higher throughout the market’s recent struggles. BKE has also formed common areas of support and/or resistance levels at $40 and $35. The trades here are simple: If BKE continues to pullback to the expected $40 support, a long position could be entered with a stop loss set under below $40. If BKE were instead to break below $40, one might enter a short position with a stop set above $40, expecting of a drop down to the level of $35. If BKE gets to $35, a new long position could be entered.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT