Todays Big Stock: Sonoco Products (NYSE: SON)

A lot of the stocks I’ve seen and written articles about lately have been hanging out in similar consolidation areas. As you may have noticed, there have been several Rectangle and Triangle patterns in my newsletters as of late. However, not all stocks are stuck at the bottom. Some have actually been trying to climb out of the cellar. One stock that seems to have been trying to do that is the stock of Sonoco Products.

Sonoco Products Company is a manufacturer of industrial and consumer packaging products and a provider of packaging services. The company operates in four segments: Consumer Packaging, Tubes and Cores/Paper, Packaging Services, and All Other Sonoco. In 2010, Sunoco acquired Associated Packaging Technologies, Inc., a supplier of thermoformed containers to the frozen food industry, and Madem Reels USA, Inc., a manufacturer of nailed wood and plywood reels for the wire and cable industry, a small tube and core business in Canada and a small tube and core business in Greece.

Before discussing the potential trading opportunities with SON (Sunoco Products Company), please review the 1 yr. chart of SON that I have outlined below, with my added notations:

After bottoming out around the $28 support level (short-term Double Bottom), SON has moved out of that range over the last 3-4 weeks. Along the way, $30 has been both a support and resistance. Now, the stock has approached the same $32 level that had been support prior to the August breakdown. These (3) levels also seem to imply that SON is currently moving in steps of $2 ($28, 30, 32).

 

The Tale of the Tape: SON has moved out of its lower range and has now approached a key level of $32. As the stock has bottomed and moved higher, the level $30 has also become important. A long position could be entered on a pullback to the $30 level or on a breakout above $32. However, a bearish trader could short the stock at $32 while then adding to their position on a break below $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

Todays Big Stock: Hyatt Hotels Corporation Class (NYSE: H)

Hyatt Hotels Corporation is a hospitality company which manages, franchises, owns and develops Hyatt-branded hotels, resorts and residential and vacation ownership properties. Hyatt manages its business in three segments: owned and leased hotels, which consists of its owned and leased full service and select service hotels; North American management and franchising, which consists of the company’s management and franchising of properties located in the United States, Canada and the Caribbean, and International management and franchising, which consists of its management and franchising of properties located outside of the United States, Canada and the Caribbean. Its full service hotels and resorts operate under five brands: Park Hyatt, Andaz, Grand Hyatt, Hyatt Regency and Hyatt. Hyatt’s two select service brands are Hyatt Place and Hyatt Summerfield Suites.

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

H 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 H, the Rectangle pattern formed a $35 resistance (red) and a $30 support (green). Although H has had two failed breakout attempts already, the stock will have to break 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 H is $5 high ($35 – $30), H should climb to a minimum of $40 ($35 + $5) if it breaks above $35 or fall to $25 ($30 – $5) 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: H 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 H, a trader could enter a long position at the $30 support or a short position on a rise to $35. 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 H were to break above $35 or a short position if the stock breaks below $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

Todays Big Stock: Nordson Corporation (NasdaqGS: NDSN)

Nordson Corporation is a manufacturer of equipment used for precision material dispensing, testing and inspection, surface preparation and curing. Its technology-based systems can be found in production facilities globally. It serves diverse markets, including the appliance, automotive, bookbinding, container, converting, electronics, food and beverage, furniture, life sciences and medical, light emitting diodes (LED), metal finishing, nonwoven, packaging, semiconductor and solar energy industries. Its products are marketed through a network of direct operations in more than 30 countries. The company operates in three segments: Adhesive Dispensing Systems, Advanced Technology Systems and Industrial Coating Systems.

To analyze Nordson’s stock for potential trading opportunities, please take a look at the 1-year chart of NDSN (Nordson Corporation) below with my added notations:

I latched on to NDSN because of the one simple level at $45. Not only can you see the $45 support (green) from earlier in the year, but the $45 resistance (red) has been very obvious over the last 2 months. So, the $45 price is key to this stock. If you are bearish, you might short NDSN at the $45 mark, but if you are bullish you would want to see the stock break through the $45 resistance.

The Tale of the Tape: NDSN presents a couple of very simple trading opportunities based on its key level of $45. A short position could be entered at the $45 resistance with a stop above that level, or a long play could be made on a break above $45 if that should happen.

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: Meadwestvaco Corp. (NYSE:MWV)

MeadWestvaco Corporation is a global packaging company that provides packaging solutions the healthcare, beauty and personal care, food, beverage, tobacco and home and garden industries. MeadWestvaco’s other business operations serve the consumer and office products, specialty chemicals, forestry and real estate markets. The company operates in five different business segments: Packaging Resources, Consumer Solutions, Consumer & Office Products, Specialty Chemicals, and Community Development and Land Management.

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


MWV has fallen into a sideways, consolidation pattern know as a Rectangle. Rectangle patterns form 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 MWV, the Rectangle pattern formed a $28 resistance (red) and a $25 support (green). Eventually, MWV will have to break one of those two levels.

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 MWV is $3 high ($28 – $25), MWV should climb to a minimum of $31 ($28 + $3) if it breaks above $28 or fall to $22 ($25 – $3) if the stock breaks below the $25 level. Chart pattern price targets are certainly not guarantees, but they are often fulfilled.

 

The Tale of the Tape: MWV 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 MWV, a trader could enter a long position at the $25 support or a short position on a rise to $28. 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 MWV were to break above $28 or a short position if the stock breaks below $25.

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: Continental Resources, Inc. Com (NYSE: CLR)

Continental Resources, Inc. is an independent crude oil and natural gas exploration and production company with operations in the North, South and East regions of the United States. As of December 31, 2010, approximately 70% of its estimated proved reserves were located in the North region. It focuses its exploration activities in new or developing plays that provide the company the opportunity to acquire undeveloped acreage positions for future drilling operations. As of year-end 2010, its estimated proved reserves were 364.7 million barrels of crude oil equivalent, with estimated proved developed reserves of 140.4, or 38% of its total estimated proved reserves.

To analyze Continental Resources’ stock for potential trading opportunities, please take a look at the 1-year chart of CLR (Continental Resources, Inc) below with my added notations:

CLR has several different levels to focus on. First, the $50 level (green) has been an important level for CLR over the entire year and is currently acting as support. Next, the $60 area (blue) has always acted as support/resistance since December of last year. Lastly, CLR has created a potential short-term, down trending resistance level (red), which the stock is getting closer to hitting again.

The Tale of the Tape: There are several trading opportunities available on CLR, depending on your overall market stance, and what the stock ultimately does: 

1) A long trade at $50
2) A short trade if CLR breaks below $50
3) A short trade at the down trending resistance (near $55)
4) If the stock breaks through the down trending resistance line, a short trade at the $60 resistance
5) A long trade if CLR can break up through $60

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