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

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