Todays Big Stock: Transocean Ltd (NYSE:RIG)

Whether the market goes up, or the market goes down, I like to trade stocks that forecast their movement either way. In other words, stocks that seem to tell me how to trade them. This could be in the form of a pattern, visibly important levels, or maybe a little bit of both. My simple belief is that knowing where to get in is half the battle. If you can find stocks that clearly show you their most important price points, then you will most likely be setting yourself up for success. One stock of many that I think fits that description would be that of RIG (Transocean, Ltd).

Transocean Ltd. (Transocean) is an international provider of offshore contract drilling services for oil and gas wells. Transocean operates in two segments: contract drilling services and other operations. Contract drilling services, the company’s primary business, includes contracting Transocean’s mobile offshore drilling fleet, related equipment and work crews primarily on a day rate basis to drill oil and gas wells. Its other operations segment includes drilling management services, and oil and gas properties. It participates in oil and gas exploration and production activities.

Please take a look at the 1-year chart of RIG (Transocean, Ltd) below with my added notations:

First, notice all of the important price levels I have highlighted on RIG. The stock seems to always find support or resistance on or at the increments of $5. For the 1st four months of the year you will notice the clear $75 support level that RIG created. Once RIG broke that support, down it went. Then RIG broke its $70 level, down it went. Next up was the $65 level, break, lower it went. Once the stock broke $60, $55 didn’t stand a chance.  Every time RIG broke a level of $5, the stock went lower. Did you also notice that every time RIG rallied it found resistance at those previous support levels of $5? Next up, the major support of $50 at the 52 week low.

The great thing about RIG is that it shows you how to trade it no matter what direction the market moves. If you like the short side of the market, you can short RIG on rallies back up to any $5 level. If you want a long play, you could buy RIG on any pullback to a $5 level or breakout through one of those levels.

The Tale of the Tape: RIG finds the levels of $5 important. These price points always appear to act as either support or resistance or usually both. You can trade this stock no matter what it does. If it rallies back up to $60, you could enter a short play. If it breaks back above $60, you could enter a long play. You could buy RIG if it comes down to $50, or short the stock if it breaks that $50 support. Etc., etc., etc!

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: Vertex Pharmaceuticals (NasdaqGS: VRTX )

Do you think the worst is behind us? If so, or you simply think the rally that started last week still has legs, then you may want to prepare for a pullback.  After bottoming at 1100 last week, the S&P rallied almost 10% over the course of the next 4 days. A pullback could be on the menu, and that could be a great thing if you’re looking for the market to continue higher.  Pullbacks bring stocks down to previous levels and provide the trader with new entry points. One stock that I am watching for this type of opportunity would be VRTX (Vertex Pharmaceuticals, Inc).

Vertex Pharmaceuticals Incorporated (Vertex) is in the business of discovering, developing and commercializing small molecule drugs for the treatment of diseases. Vertex is engaged in phase-I clinical trials and/or nonclinical activities with respect to a range of additional drug candidates, including compounds intended for the treatment of hepatitis C virus (HCV) infection, cystic fibrosis (CF) and influenza.

Please take a look at the 1-year chart of VRTX (Vertex Pharmaceuticals, Inc) below with my added notations:

From March until August, VRTX had held the $45 level as support (green). After breaking that level of support a few weeks ago, VRTX fell back down to its previous level of $40 (pink). After rallying back up to the $45 level, VRTX broke back above that level earlier this week. If the market pulls back a bit, VRTX could come back down to the $45 level for a support bounce to eventually make its way back up to the $50-52 area. However, if VRTX does not hold the $45 level, the stock will probably test new lows for the year.

The Tale of the Tape: After creating a previous level of support at $45, VRTX has broken back above that level earlier this week.  Although VRTX should be moving higher overall from here, a pull back to the $45 level could provide a great entry for a support bounce. A long position could be entered at or near $45 with a stop below $45. A break back below $45 would negate the forecast for a move higher and a short position would be advised instead.

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: Praxair, Inc. (NYSE: PX)

After dropping drastically over the past several weeks, the market has finally started to recover a bit over the last few days. For now, all looks better. However, as the market continues to move higher, I believe the rally could end up being short lived. If you missed out on entering short opportunities when the initial sell-off started, you may want to look to rallies for a 2nd chance to get short on a few stocks.  One stock worth watching on a move higher would be PX (Praxair Inc).

Praxair, Inc. (Praxair) is an industrial gas supplier. Praxair’s primary products for its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). It also designs, engineers, and builds equipment that produces industrial gases for internal use and external sale. Praxair serves approximately 25 industries, such as healthcare and petroleum refining; computer-chip manufacturing and beverage carbonation; fiber-optics and steel making; and aerospace, chemicals and water treatment.

Please take a look at the 1-year chart of PX (Praxair Inc) below with my added notations:

PX has formed several important price levels over the course of the year. The key level to watch at this time is $100. After breaking below that $100 level earlier this month, the stock moved lower as expected. Not surprisingly, PX found support at another key level, that being $90. As the market has moved higher, PX has rallied back up to the $100 level. As PX makes it way back to the $100 level, a trader could expect the stock to resist that level and most likely move lower again.

If PX does in fact move lower again, the levels of $95 and $90 would come back into play. For example, if a trader believes any pullback is just temporary, $95 would be an expected support level.

The Tale of the Tape: After breaking its key level of $100 earlier this month, PX moved considerably lower as expected.  Now that PX has started to recover, the $100 level should act as resistance if the stock gets there. From there, PX should move lower again, thus a trader would want to enter a short position with a stop above $100. A break back above $100 would negate the forecast for a move lower and a long position could be entered instead.

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: iRobot (NASDAQ:IRBT)

After dropping drastically over the past several weeks, the market has finally started to recover a bit over the last few days. For now, all looks better. However, as the market continues to move higher, I believe the rally could end up being short lived. If you missed out on entering short opportunities when the initial sell-off started, you may want to look to rallies for a 2nd chance to get short on a few stocks.  One stock worth watching on a move higher would be IRBT (iRobot Corporation).

iRobot Corporation (iRobot) designs and builds robots. IRobot’s home care robots perform time-consuming domestic chores while its government and industrial robots perform tasks, such as battlefield reconnaissance and bomb disposal, multi-purpose tasks for local police and first responders, and long-endurance oceanic missions. It sells its robots to consumers through a range of distribution channels, including chain stores and other national retailers, and through its on-line store, and to the U.S. military, as well as other government agencies globally.

Please take a look at the 1-year chart of IRBT (iRobot Corporation) below with my added notations:

IRBT has formed an important price level at $30 over the course of this year. After breaking below that key $30 level earlier this month, the stock moved lower as expected. As the market has rallied higher, IRBT has started to make its way back up to the $30 level. If IRBT does make it back to the $30 level, one would expect that the stock would resist that level and most likely move lower again.

The Tale of the Tape: After breaking its key level of $30 earlier this month, IRBT moved considerably lower as expected.  Now that IRBT has started to recover, the $30 level should act as resistance if the stock gets there. From there, IRBT should move lower again, thus a trader would want to enter a short position with a stop above $30. A break back above $30 would negate the forecast for a move lower.

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: Broadsoft, Inc (NasdaqGM: BSFT)

On the other hand, maybe I was right, the market has started a rally. Wednesday brought a little doubt to my mind, but yesterday seems to have confirmed my belief that a rally of some extent had started on Tuesday.  Thanks to Tuesday and Thursday’s moves, a lot of stocks that I am watching have broken back above key areas of resistance. This should be a sign of higher prices for those stocks, even if those moves are only temporary. One stock of many that I am watching would be BSFT (Broadsoft, Inc).

BroadSoft, Inc. is global provider of software that enables fixed-line, mobile and cable service providers to deliver voice and multimedia services over their Internet protocol-based (IP-based), networks. The company’s software, BroadWorks, enables its service provider customers to provide enterprises and consumers with a range of cloud-based, or hosted, IP multimedia communications, such as hosted IP private branch exchanges (PBXs), video calling, unified communications (UC), collaboration, and converged mobile and fixed-line services.

Please take a look at the 1-year chart of BSFT (Broadsoft, Inc) below with my added notations:

BSFT has what I believe is a key level at $30 (blue). You can see the $30 mark as resistance back in January, support in June, and then back to resistance again over the last couple of weeks. Yesterday BSFT broke back above the $30 level. If the market rally cooperates, BSFT could make its way back up to the $35 area. However, if BSFT cannot hold $30, the stock will probably test new lows for the year.

The Tale of the Tape: After creating an important level at $30, BSFT has broken back above that resistance this week.  BSFT should be moving higher from here, even if only for a while. A long position could be entered at or near $30 with a stop below $30. A break back below $30 would negate the forecast for a move higher and a short position would be advised instead.

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