Todays Big Stock: Northrop Grumman Corporation Co (NYSE: NOC)

Northrop Grumman Corporation is an integrated enterprise consisting of businesses that cover the entire security spectrum, from undersea to outer space and into cyberspace. Northrop operates in four segments: Aerospace Systems, Electronic Systems, Information Systems and Technical Services. In April 2009, the company acquired Sonoma Photonics, Inc., as well as assets from Swift Engineering’s Killer Bee Unmanned Air Systems product line. Last year the company separated its shipbuilding business through a spin-off of its subsidiary, Huntington Ingalls Industries, Inc.

To review Hyatt Hotels’ stock, please take a look at the 1-year chart of NOC (Northrop Grunman Corporation) below with my added notations:

After breaking a key level of $60 (blue) in August, NOC 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 with clearly defined breakout and breakdown points. For NOC, the Rectangle pattern has formed a $55 resistance (red) and a $50 support (green). The stock will have to break through one of those levels eventually.

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 NOC is $5 high ($55 – $50), NOC should climb to a minimum of $60 ($55 + $5) if it breaks above $55 or fall to $45 ($50 – $5) if the stock breaks below the $50 level. Chart pattern price targets are certainly not guarantees, but they are often fulfilled.

The Tale of the Tape: NOC 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. For NOC, a trader could enter a long position at the $50 support or a short position on a rise to $55. However, a lot of traders like to wait for the break up or down to enter the trade. So, a long trade could be made if NOC were to break above $55 or a short position if the stock breaks below $50.

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: Thoratec Corporation (NasdaqGS: THOR)

When it comes to entering a stock hitting a 52-week high, I prefer to look for ones hitting a “NEW” high. To me, his would be a stock that hasn’t hit a new 52-week high in quite some time. In addition, and more importantly, I want the stock to have broken through a key area of resistance. This way I know that it wasn’t just any move higher. One such stock that fits that description would be that of Thoratech Corporation.

Thoratec Corporation is a manufacture of mechanical circulatory support with a product portfolio to treat a range of clinical needs for advanced heart failure patients. The Company develops, manufactures and markets medical devices used for circulatory support. Its primary product lines are the ventricular assist devices: the HeartMate II Left Ventricular Assist System, the HeartMate Left Ventricular Assist System, the Thoratec Paracorporeal Ventricular Assist Device, and the Thoratec Implantable Ventricular Assist Device.

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

THOR has been trading sideways for the last 5 months, while running into resistance at $36 (navy). That $36 resistance meets my definition of a clear resistance level that would signify an important 52-week high breakout if WPRT could manage to break above it.  The stock finally broke through that $36 resistance last week. This is definitely the “NEW” 52-week high resistance breakout I like to see.  From here, the stock should be heading higher, most likely on a new uptrend.

Be aware though, THOR tried to breakout back in July only to fail and fall back down to the $30 support level (green).

The Tale of the Tape: THOR had formed a key resistance level of $36, which could be considered a 52-week high breakout since THOR broke above it last week. This stock should be moving higher from here. A long trade could be entered now, or if THOR pulls back a bit further to $36, with a stop set below the $36 level. A break below $36 would negate this forecast and might signal another fake out such as in July. If the market were to sell-off substantially, and bring THOR back down to $30 (green), a long position could also be entered there with a stop below that 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: BroadSoft, Inc. (NasdaqGM: BSFT)

Although the market has been on one of the biggest 1 ½ week runs in a couple of years, it can’t go straight up forever. My bet would be that the market is a lot closer to a pullback than to another 150-point run-up. And since a market pullback should be close, grabbing a short position could prove profitable in the short-term, while still being prepared for upcoming long trades. A stock that may be hitting an area of strong resistance, and have a great level of potential support, would be that of Broadsoft, Inc.

BroadSoft, Inc. is a global provider of software that enables fixed-line, mobile and cable service providers to deliver voice and multimedia services over their Internet protocol-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, video calling, unified communications, collaboration and converged mobile and fixed-line services. BroadWorks performs a critical network function by serving as the software element that delivers and coordinates voice, video and messaging communications through a service provider’s IP-based network.

Before discussing potential trading opportunities, please take a look at the 1-year chart of BSFT (Broadsoft, Inc.) below with my added notations:

As you can see from the chart above, BSFT has a very important price level at $40 (navy). After struggling with the $40 resistance earlier this year, BSFT broke above that level and continued to bounce on it as support for the next 3 months. In May, BSFT broke back below that $40 level and fell lower as one would expect. The stock then rallied back up to the $40 level only to hit resistance again in July before selling off down to $21. On Friday, the stock made its way back up to the $40 resistance.

The Tale of the Tape: BSFT has approached it’s $40 level again, and with a market pullback due, a trader might consider entering a short position on BSFT at the $40 level with a stop placed above that level. For those traders waiting for an opportunity to enter long positions, BSFT also a previous level of resistance at $35 (green) which should be a level of support if the stock should pull back down to that 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: Molycorp, Inc Common Stock $0.0 (NYSE: MCP)

Molycorp, Inc. is a rare earth oxide producer in the Western hemisphere and owns a rare earth project outside of China. The company is in development stage. The company focuses to be an integrated producer of rare earth products, including oxides, metals, alloys and magnets. Molycorp’s rare earth products are used in a range of applications, including clean energy technologies, such as hybrid and electric vehicles and wind power turbines; multiple high-tech uses, including fiber optics, lasers and hard disk drives; numerous defense applications, such as guidance and control systems and global positioning systems, and advanced water treatment technology for use in industrial, military and outdoor recreation applications.

Before discussing the potential trading opportunities for Molycorp’s stock, please take a look at the 1-year chart of MCP (Molycorp, Inc.) below with my added notations:

MCP has a very important price level at $40. The $40 level was resistance last year (red), support in the beginning of this year (green), and recently resistance again (red). The stock also seems to have another important level at $45 (purple), has found it’s most recent bottom at $30 (blue), and a very short-term support level at $35 (navy). So, in addition to showing a couple of clear levels of support/resistance, MCP is also showing us that it tends to bounce between each $5 increment, $40 seeming to be the most important right now.

The Tale of the Tape: After breaking below its $40 level and falling to $30, MCP has rallied back up near the $40. A long position could be entered on a pullback to $35 OR on break back above $40, with a stop placed below the level of entry. A short play can also be made at $40, or on a break back below $35, with a stop set above the level of entry.

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: Potash Corporation of Saskatche (NYSE: POT)

And yet another day of moving higher! Will this market rally ever end? Yes. But, thanks to this market’s insistent rally, some stocks have made their way up to old levels of potential resistance. Since a market pullback should be close, grabbing a short position could prove profitable in the short-term. A stock that may be hitting an area of strong resistance would be that of Potash Corp. of Saskatchewan Inc.

Potash Corporation of Saskatchewan Inc. is an integrated fertilizer and related industrial and feed products company. Potash owns and operates five potash mines in Saskatchewan and one in New Brunswick. It also holds mineral rights to the Esterhazy mine where potash is produced under a mining and processing agreement with a third party. Its phosphate operations include the manufacture and sale of solid and liquid phosphate fertilizers; animal feed supplements and industrial acid, which is used in food products and industrial processes. It has a phosphate mine and two mineral processing plant complexes in northern Florida and six phosphates feed plants in the United States. Its nitrogen operations involve the production of nitrogen fertilizers and nitrogen feed and industrial products, including ammonia, urea, nitrogen solutions, ammonium nitrate and nitric acid.

Please take a look at the 1-year chart of POT (Potash Corp. of Saskatchewan Inc.) below with my added notations:

As you can see from the chart above, POT has a very important price level at $50. After struggling with the $50 resistance (red) late last year, POT broke above that level and continued to bounce on it as support (green) for the next 8 months. In September, POT broke that $50 support, fell lower as one would expect, and then rallied back up to the $50 level only to find resistance there yet again (red). Just yesterday the stock approached the $50 resistance.

The Tale of the Tape: POT is approaching it’s $50 resistance again, and with a market pullback due, a trader might want to enter a short position on POT at the $50 level with a stop placed above that level. For those traders waiting for an opportunity to enter long positions, POT also has a potential level of support at $45 (blue) if the stock should pull back down to that 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