Todays Big Stock: BHP Billiton plc Sponsored ADR (NYSE: BBL)

The current rally is probably getting a little long in the tooth, thus a pullback may be in the works. After all, the S&P has rallied almost 125 points in a week without any substantial pullback. Thanks to that rally though, a lot of stocks have broken back above previous levels. This should be a sign of higher prices for those stocks, even if those moves are only temporary. One stock that has broken back above resistance and that has multiple levels to trade off of is that of BHP Billiton Plc.

BHP Billiton plc is a diversified natural resources company. The company operates nine customer sector groups: petroleum, aluminium, base metals (including uranium), diamonds and specialty products, stainless steel materials, iron ore, manganese, metallurgical coal and energy coal. During the most recent fiscal year, the BHP realized an annual production volume of 158.56 million barrels of oil equivalent. During fiscal 2010, the company produced 1.2 million tonnes of aluminium. It also produced 13.9 million tonnes of bauxite and 3.8 million tonnes of alumina.

Before discussing a potential trading opportunity with BBL (BHP Billiton Plc.), please review the 1 yr. chart of BBL that I have outlined below, with my added notations:

BBL simply gravitates to the increments of $10. Prior to the August breakdown, BBL had a clear level at $80 (purple) and another at $70 (teal). After breaking below the $70, BBL found support for a month or so at $60 and then broke down to the $50 level of support. However, yesterday the stock broke back above the previous level of $60 and should be moving higher from here.

The Tale of the Tape: BBL has important price levels at each increment of $10 and has broken back above one of those increments at $60. Since the market rally is getting a little old, a pullback could bring BBL back down to that $60 level. This would provide an excellent opportunity for a long position at $60, in expectation of a possible run to $70, with a stop placed below that level. If BBL cannot hold $60, a short position could be entered with an expected drop back down to the $50 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: DeVry Inc. (NYSE: DV)

Thanks to last week’s market rally, 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 has broken back above resistance would be that of DeVry Inc.

DeVry Inc. is a provider of educational services and the parent organization of Advanced Academics, Becker Professional Education, Carrington College and Carrington College California, Chamberlain College of Nursing, DeVry Brasil, DeVry University, and Ross University. These institutions offer a range of programs in business, healthcare and technology and serve students in middle school through postsecondary education, as well as accounting and finance professionals.

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

DV has a very important, long-term price level at $40 (green). The stock also seems to have another important level at $45 (red) and has found it’s most recent support level at $35 (blue). So, in addition to showing clear levels of support/resistance, DV is also showing us that it tends to bounce between each $5 increment.

After breaking the $40 level last month, DV fell lower, just as a trader would expect on a break of support. Thanks to the market rally of the past week, DV has broke back above the $40 level. If the market rally continues, DV could make its way back up to the $45 resistance area. However, if DV cannot hold $40 on any pullback, the stock will probably retest the $35 level again.

 

The Tale of the Tape: After breaking below its $40 level and falling to $35, DV broke back above that $40 level last week. DV should be moving higher overall from here, even if only for a while. A long position could be entered at or near $40 with a stop below that level. A break below $40 would negate the forecast for a move higher and a short position would be advised instead with a stop above $40.

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: EMC Corporation Common Stock (NYSE: EMC)

EMC Corporation develops, delivers and supports the information technology (IT) industry’s range of information infrastructure and virtual infrastructure technologies, solutions and services. EMC provides information storage, back-up and protection, management, security, information intelligence, data computing and virtualization technologies, services and solutions. EMC operates in two business categories: EMC Information Infrastructure and VMware Virtual Infrastructure. EMC Information Infrastructure provides a foundation for organizations to store, manage, protect, analyze and secure information and enhance their advantage within traditional data centers, virtual data centers and cloud-based IT infrastructures. VMware Virtual Infrastructure, which is represented by EMC’s interest in VMware, Inc. (VMware), is a provider of virtualization and cloud infrastructure software solutions.

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

After breaking drastically lower in July, EMC has fallen into a sideways, consolidation pattern know as a Rectangle. This type of pattern forms when a stock gets stuck bouncing between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. The nice thing about a Rectangle pattern is that it will provide you trading points of support and resistance, as well as giving clearly defined breakout and breakdown points. For EMC, the Rectangle pattern formed a $23 resistance (red) and a $20 support (green). 

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 point to get the minimum price objective. For example, since the Rectangle pattern for EMC is $3 high ($23 – $20), EMC should climb to a minimum of $26 ($23 + $3) if it breaks above $23 or fall to $17 ($20 – $3) if the stock breaks below the $30 level. Chart pattern price targets are certainly not guarantees, but they are often fulfilled.

The Tale of the Tape: EMC has formed a very common chart pattern know as a Rectangle. This pattern shows clear breakout and breakdown points for a potential long or short position. The possible long positions on EMC would be either on a pullback to $20, or on a breakout above $23. The short opportunities would be at either $23 or on a breakdown below $20. As always, regardless of entry, stop losses should be utilized.

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: Olin Corporation Common Stock (NYSE: OLN)

Thanks to the market rally on Tuesday and Wednesday, 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 has broken back above resistance would be that of Olin Corp.

Olin Corporation is a manufacturer concentrated in two business segments: Chlor Alkali Products and Winchester. Chlor Alkali Products manufactures and sells chlorine and caustic soda, sodium hydrosulfite, hydrochloric acid, hydrogen, bleach products and potassium hydroxide. Currently, the Chlor Alkali Products segment represents 65% of its sales. Winchester products, which represent 35% of 2010 sales, include sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges. Its subsidiary, Olin Canada ULC, operates one chlor alkali facility in Becancour, Quebec, which sells chlor alkali-related products within Canada and to the United States. Its subsidiary, Winchester Australia Limited, loads and packs sporting and industrial ammunition in Australia.

Please take a look at the 1-year chart of OLN (Olin Corp) below with my added notations:

OLN has a very important price level at $18 (green). The stock also seems to have another important level at $20 (red) and has found it’s most recent support level at $16 (blue). So, in addition to showing clear levels of support/resistance, OLN is also showing us that it tends to bounce between each $2 increment.

After breaking the $18 level earlier in the week, OLN fell lower, just as a trader would expect on a break of support. Thanks to the market rally of the past two days though, OLN has broke back above the $18 level. If the market rally cooperates, OLN could make its way back up to the $20 area. However, if OLN cannot hold $18 on a pullback, the stock will probably retest the $16 level again.

The Tale of the Tape: After breaking below its $18 level and falling to $16, OLN broke back above that $18 level yesterday. OLN should be moving higher overall from here, even if only for a while. A long position could be entered at or near $18 with a stop below that level. A break back below $18 would negate the forecast for a move higher and a short position would be advised instead with a stop above $18.

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: American Express Company Common (NYSE: AXP)

American Express Company is a global service company whose principal products and services are charge and credit payment card products and travel-related services offered to consumers and businesses around the world. American Express and its principal operating subsidiary, American Express Travel Related Services Company, Inc., are bank holding companies. It is engaged in businesses comprising four reportable operating segments: U.S. Card Services, International Card Services, Global Commercial Services, and Global Network & Merchant Services. Its range of products and services includes charge and credit card products, expense management products and services, consumer and business travel services, stored value products, network services, merchant acquisition and processing, point-of-sale, servicing and settlement, and marketing and information products and services for merchants, and fee services.

Before discussing potential trading opportunities with AXP (American Express Company), please review the 1 yr. chart of AXP that I have outlined below, with my added notations:

AXP has a long-standing support level at $42 (red) that was successfully tested again yesterday. Assuming AXP continues higher, $46 (purple) would be the first level of resistance, with $50 (blue) being the next level up. If AXP cannot hold $42, traders can expect the stock to head towards the 52-week low of $38.

The Tale of the Tape: AXP has a strong level of support at $42. A long trade could be entered at $42, or on a break above $46, with a stop placed below the level of entry. If you are bearish, short positions could be entered on a rally up to $46 or on a break below $42. Stops should be placed above the level of entry on any short positions.

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