Todays Big Stock: Gentex Corporation (NasdaqGS: GNTX)

Rally, rally, rally!! Thanks to the market’s recent rally, a lot of stocks are now moving back above key levels that they had previously broken below. 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 Gentex Corporation.

Gentex Corporation designs, develops, manufactures and markets products employing electro-optic technology: automatic-dimming rearview automotive mirrors with electronic features and fire protection products. The Company also developed and manufactures windows for the aircraft industry and non-automatic-dimming rearview automotive mirrors with electronic features. Gentex manufactures electro-optic products, including automatic-dimming rearview mirrors for the automotive industry and fire protection products for the commercial building industry. The company also manufactures dimmable windows for the aircraft industry and non automatic-dimming rearview automotive mirrors with electronic features for the automotive industry.

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

GNTX has a long-term price level of importance at $22 (green) and another important “area” at $26 (red). After breaking below the $26 level in August, GNTX found support at its $22 level. GNTX consolidated for about (2) months between those levels of $22 and $26. Earlier this week, the stock broke back above the $26 area. Since a market pullback could be approaching, traders should watch GNTX for a possible pullback to $26.

The Tale of the Tape: Now that GNTX is back above $26, that level should act as support on any pullbacks. If that does in fact happen, a long trade at $26 with a stop below that level would be advisable. However, if GNTX were to break back below $26 the $22 level might come back into play for a long trade.

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: 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