Todays Big Stock: Dollar Tree, Inc. (NasdaqGS: DLTR )

Yes, the stock market has had several rough weeks over the past few months and most stocks seem to be trending lower. Even though I have yet to find any stocks that haven’t sold off to some extent, there are a few stocks still maintaining an overall trend higher. In addition, there are the rare few that are near 52-week highs. Stocks that have held their ground through the current market sell-off, and are near their 52-week highs, could be the ones that rally strongest if the market eventually does move higher.

As I’ve mentioned in previous articles, 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 DLTR (Dollar Tree, Inc).

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

As you can see, DLTR has been in a large sideways move for the last 3 months while running into a clear resistance at $70 (red). Even though the market has caused most stocks to break lower, DLTR has held trend so far. DLTR also appears to have strong support at $60 (green). If DLTR could break through $70, it would be breaking to both a new 52-week high and through a clearly defined resistance level. Also be aware of the “min-level” at $65 (blue) during any pullbacks.

 

The Tale of the Tape: While stuck in a sideways move, DLTR has formed a key resistance level of $70, which would be a 52-week high breakout if DLTR were to break above it. This should signal higher prices ahead for the stock. A long trade could be entered if DLTR breaks out above $70, or on a pullback to $65, with a stop set below the entry point either way. If the market were to sell-off substantially, and bring DLTR back down to $60, 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: CEPHEID (NasdaqGS: CPHD)

With the stock market having had several rough weeks over the past few months, most stocks seem to be trending lower. Although I have yet to find any stocks that haven’t sold off to some extent, there are a few stocks still maintaining an overall trend higher. Stocks that have maintained their trend higher through the current market sell-off could be the ones that rally strongest if the market eventually does move higher. If nothing else, these might be stocks that drop the least on any future market sell-offs. One such stock that may fit that description would be Cepheid (CPHD).

Cepheid is a molecular diagnostics company that develops, manufactures, and markets fully-integrated systems for testing in the clinical market. The company’s systems enable molecular testing for organisms and genetic-based diseases by automating otherwise manual laboratory procedures. Its systems integrate these steps and analyze biological samples in its test cartridges. Cepheid’s two principal systems are the GeneXpert and SmartCycler. The GeneXpert system, its primary offering in the clinical market, integrates sample preparation in addition to deoxyribonucleic acid (DNA) amplification and detection. The GeneXpert system is designed for a range of user types. The SmartCycler system integrates DNA amplification and detection to allow analysis of a sample.

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

Although CPHD had a rough couple of weeks at the end of July and into August, the stock has continued its overall trend higher and is holding its ground pretty well. After pulling back to its strong $30 level (green), the stock has bounced and is making a move back up towards its $35 resistance (red). If CPHD can break through that $35 resistance, the stock should make a run back to its $40 high (blue). However, if the market stalls and starts to sell-off again, CPHD will probably pull back down to the $30 level. A break of that level would pave the way for lower prices for the stock.

The Tale of the Tape: CPHD is currently in a sideways move, but is still in an overall trend higher. CPHD has an important level at both $30 and $35. A long position could be entered on a pullback to $30, or even better, on a breakout above $35 with a stop below the level of entry. If you have a more bearish view, short trades could be made at $35 or if the stock were to break the $30 level of support.

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: Deckers Outdoor Corporation (NasdaqGS: DECK)

It would seem that the market rally that started two weeks ago might still have some juice! So, after a nice move higher yesterday, a pullback could be in order.  That can be a great thing if you’re looking for the market to continue higher overall.  Pullbacks bring stocks down to previous levels and provide the trader with new entry points. One stock that I am watching for this type of opportunity would be DECK (Deckers Outdoor Corporation).

Deckers Outdoor Corporation (Deckers) is a designer, producer, marketer, and brand manager of footwear and accessories. Deckers sells its products, including accessories, such as handbags and outerwear, through domestic and international retailers, international distributors, and directly to end-user consumers, both domestically and internationally, through its websites, call centers, retail concept stores and retail outlet stores. Deckers market its products under two brands: UGG and Teva. UGG is a brand in luxury and comfort footwear and accessories, and Teva is a brand in multi-sport shoes, rugged outdoor footwear, and sport sandals. Deckers’ other brands include Simple, a line of sneakers and accessories; TSUBO, a line of casual footwear, and Ahnu, a line of outdoor footwear.

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

From December of last year up until now, DECK has had a very important level at $78. You can see the level act as support (green) back in December and January, and then again from March until earlier this month. In January and most recently, that same $78 also acted as a very short-term resistance (red). After briefly breaking that level of support a few days ago, DECK broke back above that level yesterday. If the market pulls back a bit today or tomorrow, DECK could come down to the $78 level for a support bounce and eventually make its way back up to the $90-95 area.

The Tale of the Tape: DECK has a very important level at $78. After falling below that level late last week, DECK has now broken back above that level and should be heading higher again.  Although a long trade could be entered around the whole dollar amount of $80, a pull back to the $78 level could provide a better, lower risk entry for a support bounce. A long position entered either way should include a stop below $78. A break back below $78 would negate the forecast for a move higher and a short position could be advised instead.

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: CSX Corporation Common Stock (NYSE: CSX)

CSX Corporation (CSX) is a transportation supplier. The company provides rail-based transportation services, including rail service and the transport of intermodal containers and trailers. CSX’s principal operating company is CSX Transportation, Inc. (CSXT). It serves over 70 ocean, river and lake ports along the Atlantic and Gulf Coasts, the Mississippi River, the Great Lakes and the St. Lawrence Seaway. CSXT also serves thousands of production and distribution facilities through track connections to more than 240 short-line and regional railroads. It transports and exports coal to electricity-generating power plants, steel manufacturers, industrial plants and deep-water port facilities.

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

Like most stocks, CSX has had a rough go of it over the last month or two. CSX had been holding a very important level of support at $24 (red) for about 6 months prior to breaking lower. If you had been watching CSX, a short trade would have been advised on that break. A few weeks ago CSX finally found support at $20 (green), which had also been an important level for a couple of months last year. After rallying higher to $23, CSX is now testing the $20 area again. Could CSX bounce once again, or will the stock break even lower?

The Tale of the Tape: After holding $24 for several months, CSX broke that support and fell lower as expected. Now, CSX is finding support at a previous level of $20. If you are currently bullish on the overall market or CSX, a long entry at $20 would make a good trade with a stop set under $20. However, if you are looking to short CSX, the break of $20 would be your 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: SodaStream International Ltd. (NasdaqGS: SODA)

Sodastream International Ltd., along with its subsidiaries, is engaged in developing, manufacturing and marketing home beverage carbonation systems and related products. Sodastream develops manufactures and sells soda makers and exchangeable carbon-dioxide (CO2) cylinders, as well as consumables, consisting of CO2 refills, reusable carbonation bottles and flavors to add to the carbonated water. Its products are sold under the Sodastream name in most countries, and under the Soda-Club name or select other names in certain other countries. The company sells its products, through more than 35,000 retail stores in 39 countries.

Sodastream released their quarterly earnings report back on August 11th and handily beat their estimates. Unfortunately, future guidance was not received well by the market and the stock sold-off. I guess you could say that SODA has definitely popped, but just lower. How much lower can the stock go? When might be a good time to buy?

Please take a look at the 1-year chart of SODA (Sodastream International, Ltd) below with my added notations:

As you can see, it’s been rough sledding for SODA over the last couple of weeks since the company released their earnings (red).  I might have thought the stock would try to hold $50, but no dice. The next level down of $40 (green) did act as support on the earnings day, but SODA has since broken that level as well. Currently, the stock is holding under the $40 level. If SODA could break back above $40, the stock should move higher. However, a lower move would bring the levels of $35 (blue) and $30 (purple) back into play for a trade.

The Tale of the Tape: SODA has experienced a drastic sell-off since the release of their earnings report a few weeks ago. Currently, $40 is the important level to watch. If you are bearish on the market and/or SODA, a short trade on a move up to $40 make sense. However, if you are watching for a long trade, a break above $40 or a pullback to $35 would make sense with a stop below the level of entry.

Side note: If a long entry is made at $35 and that level was to break, another short play could be made. The next long entry would be on a fall to $30.

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