Todays Big Stock: CurrencyShares Euro Trust (NYSE: FXE)

With all the talk about Greece and European debt, everyone seems to have a take on the future direction of the euro.  Well, as any of you that follow my newsletters already know, I actually like to follow the US dollar and the euro from time to time. Whenever there’s a potential trade to be made I like to highlight it here in my articles.

The FXE exchange trade fund (ETF) is a trading vehicle that gives investors a way to buy or short the euro without actually buying/shorting the currency. Please review the chart of the FXE, which is the Currency Shares Euro Trust ETF, with my added notations:

First, I’d like you to notice the Symmetrical Triangle (ST) pattern (blue) that has formed on the FXE since the beginning of May. This pattern is created from a down trending resistance that converges with an up trending support. Next, you will see that $140 has been an important level of both support and resistance for the FXE (red).

If the FXE were to break out through the ST resistance, the FXE should be headed higher. Or, if the FXE were to break through the bottom support of the ST, that could be the “shot across the bow” for the FXE to move lower.  A break of that support would bring the $140 level into focus and a break of that level would most likely confirm the FXE’s trend towards lower prices.

The Tale of the Tape: Right now the FXE is sandwiched between the formation of a Symmetrical Triangle’s support and resistance trend lines. If the FXE were to break above the resistance, a long position in FXE (or euro) might be a great trade. On the contrary, if the FXE were to break below its support, shorting the FXE (or euro) would be the ideal trade. Also, waiting for a second break of support at $140 would most likely make a short position a higher probability trade.

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: Fedex (NYSE: FDX)

FedEx Corp, the world’s second-largest package delivery company, released its fiscal 4th quarter earnings on Wednesday before the open. FedEx earnings increased 33% on stronger demand and being able to pass higher fuel costs on to its customers.

FedEx earned $558 million, or $1.75 per share, which compares with $419 million, or $1.33 per share, in the same period last year. Revenue increased 12 percent to $10.55 billion. Analysts had expected earnings of $1.73 per share on revenue of $10.4 billion. For the full year, FedEx earned $1.45 billion, or $4.57 per share, compared with $1.18 billion, or $3.76 per share, for fiscal 2010

FedEx is considered a bellwether of global economic health among analysts and economists because it ships a wide variety of goods. Its business reflects the ups and downs of business and consumer spending. Wall Street has so far applauded the release with FDX share being up 2% in pre-market trading.

Below is a 1 yr. chart of FDX (FedEX Corp) with my added notations:

FDX has two important price levels to watch for potential trading entries. The $90 level has been and important area of both resistance and support for FDX throughout the last 9 months. During the same period of time, $85 has been a strong level of support.

The Tale of the Tape: FDX has released its 4th quarter earnings report. The $85 and $90 levels are the prices to watch. Depending on your view, and market position, a short position could be entered on a rally up to $90 OR on a break below $85, while a long position could be entered at $85 OR on a breakout above $90.

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: Rackspace Hosting (NYSE: RAX)

From time to time I like to give readers a heads up on potential trading opportunities. Before considering any trades outlined in this newsletter, always remember that you must decide for yourself if you personally like the trade.

One key factor in making that decision will be to decide which side of the trade you believe gives you the highest probability of success. In other words, do you like the short side of the market, or do you like the long side? You don’t necessarily have “know” what side to be on, but it certainly helps to take a stance. So, if you haven’t thought about it, review the overall indices themselves. Take a look at the S&P 500 for example.  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.

The trading opportunity that I’d like to review today is that of RAX (Rackspace Hosting, Inc).  Before discussing, please review the 1 yr. chart of RAX that I have outlined below, with my added notations:

RAX has formed two important levels over the last year. The first is the 9-month up trend line support (navy). The second would be the level of $40 (red), which has taken shape over the last 5 months.  Although a break of the up trend line does not by default mean RAX would be starting a downtrend, a break of the $40 level should confirm the start of a downtrend. As you can see, RAX has broken BOTH supports, thus should be moving lower.

The Tale of the Tape: RAX has recently broken (2) very important support levels. Because of this, RAX should continue lower as it begins the initial stages of a downtrend. A higher risk short position could be entered now, or a lower risk short position entered on a rally back up to the $40 level, if that occurs. Either way, a stop above $40 would be advised.

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: eBay, Inc. (NASDAQ:EBAY)

From time to time I like to give readers a heads up on potential trading opportunities. Before considering any trades that I might outline in Chart School, always remember that you must decide for yourself if you like the trade.

One key factor in making that decision will be to decide which side of the trade you believe gives you the highest probability of success. In other words, do you like the short side of the market, or do you like the long side? You don’t necessarily have “know” what side to be on, but it certainly helps to take a stance. So, if you haven’t thought about it, review the overall indices themselves. Take a look at the S&P 500 for example. 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.

The trading opportunity that I’d like to review today is that of EBAY (eBay, Inc). Before discussing, please review the 1 yr. chart of EBAY that I have outlined below, with my added notations:

EBAY has created a common reversal pattern known as a Double Top. This type of price action typically occurs after an up trend and signals a potential reversal. Confirmation of this pattern, and the sign that the trend reversal should have started, would be a break of support. In the case of EBAY, the support for the Double Top pattern is $30. As you can see, EBAY has broken that support, thus should be moving lower.

Another piece of information that can be garnered from price patterns is their price projections. Simply take the height of the overall pattern from the support to the top of the “tops”, in this case $5 ($35 top – $30 support), and subtract that amount from the breakdown point of $30. This gives you a minimum price target of $25. Obviously, this isn’t a guaranteed forecast, but it does commonly materialize.

The Tale of the Tape: EBAY is a stock that has recently broken support and confirmed its Double Top formation. Because of this, EBAY should fall to a minimum of $25. A higher risk short position could be entered now, or a lower risk short position entered on a rally back up to $30, if that occurs. 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: Titan International, Inc. (NYSE: TWI)

From time to time I like to give readers a heads up on potential trading opportunities. Before considering any trades that I might outline in Chart School, always remember that you must decide for yourself if you like the trade.

One key factor in making that decision will be to decide which side of the trade you believe gives you the highest probability of success. In other words, do you like the short side of the market, or do you like the long side? You don’t necessarily have “know” what side to be on, but it certainly helps to take a stance. So, if you haven’t thought about it, review the overall indices themselves. Take a look at the S&P 500 for example.  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.

The trading opportunity that I’d like to review today is that of TWI (Titan International, Inc).  Before discussing, please review the 1 yr. chart of TWI that I have outlined below, with my added notations:

TWI has created a common reversal pattern known as a Head and Shoulders (H&S). This type of price action typically occurs after an up trend and signals a potential reversal. Confirmation of this pattern, and the sign that the trend reversal should have started, would be a break of support (neckline) at $25. As you can see, TWI has broken that support, as well as its up trending support, thus should be moving lower.

Another piece of information that can be garnered from price patterns is their price projections. Simply take the height of the overall pattern from the neckline to the top of the head, in this case $6 ($31 top – $25 neckline support), and subtract that amount from the breakdown point of $25. This gives you a minimum price target of $19. Obviously, this isn’t a guaranteed forecast, but it does commonly materialize.

The Tale of the Tape: TWI is a stock that has recently broken support and confirmed its H&S formation. Because of this, TWI should fall to a minimum of $19. A higher risk short position could be entered now, or a lower risk short position entered on a rally back up to $25, if that occurs.

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