Todays Big Stock: J.C. Penney Company, Inc. Holdi (NYSE: JCP)

As I always encourage, you want to have stocks in your watch list that present you with trading opportunities regardless of what direction the market heads. On one hand, you may think the market is heading higher, but on the other hand; the market always reserves the right to change its mind! One such stock that may fit that description of giving you a trade either way would be that of J.C. Penny Company, Inc.

J.C. Penney Company, Inc. is a holding company. The company is a retailer, operating 1,106 department stores in 49 states and Puerto Rico. Its business consists of selling merchandise and services to consumers through its department stores and through the Internet website at jcp.com. J.C. Penney sells family apparel and footwear, accessories, fine and fashion jewelry, beauty products through Sephora inside jcpenney and home furnishings. In addition, its department stores provide its customers with services, such as styling salon, optical, portrait photography and custom decorating. As of January 29, 2011, its supply chain network operated 26 facilities at 18 locations. Its network includes 13 store merchandise distribution centers, five regional warehouses, four jcp.com fulfillment centers and four furniture distribution centers.

To review J.C. Penney’s stock, please take a look at the 1-year chart of JCP (J.C. Penny Company, Inc.) below with my added notations:

JCP has created a couple of short-term price levels over the last month and a half. First, JCP has formed a clear resistance area at $27.50 (red). In addition, the stock has also been climbing a short-term, up-trending support level (green). These two levels combined have JCP stuck within a common chart pattern known as an Ascending Triangle that will eventually have to break one way or another. Most traders will choose to wait to see which level breaks before entering a position

A break above $27.50 should signal higher prices for JCP, but were the stock to break the up trending support line instead, JCP will most likely hit new 52-week lows.

The Tale of the Tape: JCP is currently stuck between two very important levels for the stock: The up-trending support and the $27.50 resistance. A long trade could be made on a break above the $27.50 level with a stop placed under the level. On the other side, you could enter a short trade on JCP if the stock breaks below the up-trending support level. In that case, a stop should be placed 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: Hansen Natural Corporation (NasdaqGS: HANS)

Are you bearish? Looking for upcoming bearish opportunities?  One such stock that may be setting up for a very good bearish trade would be that of Hansen Natural Corporation.

Hansen Natural Corporation is a holding company. Hansen develops, markets, sells and distributes alternative beverages. The company’s category beverages brand names include Monster Energy, Java Monster, Monster Energy Extra Strength Nitrous Technology, Monster Rehab, Peace Tea, Hansen’s, Hansen’s Natural Sodas, Junior Juice, Blue Sky, X-Presso Monster, Vidration, Worx Energy, Admiral, Lost Energy, Hubert’s, Rumba, Samba and Tango. It has two segments: Direct Store Delivery, whose principal products consists of primarily energy drinks, and Warehouse, whose principal products consists of juice based and soda beverages.

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

As you can see from the chart above, an Ending Diagonal is essentially a type of triangle or wedge formation. HANS has formed an up trending resistance line (red) and an up-trending support level (green). These two trend lines combine to form the Ending Diagonal on HANS.

Ending diagonals are similar to Rising Wedges in shape, but rather than forming after a decline, they are usually terminal moves that occur at times when the preceding stock move has gone too far, too fast. The Ending Diagonal formation is usually followed by a sharp decline retracing at least back to the level from which it began ($70 on HANS) and typically much further.

The Tale of the Tape: HANS appears to be forming an Ending Diagonal chart pattern. If the pattern confirms, by breaking support, a short trade could be entered with an expectation of a fall to at least $70. A stop should be place above the breakdown point when/if it occurs.

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: Guess?, Inc. (NYSE:GES)

As I mentioned in Friday’s newsletter, it always pays to have stocks in your watch list that present you with trading opportunities regardless of what direction the market moves. Although you may believe the market is headed higher or lower, you obviously can never know. After all, no matter what, the market always reserves the right to change its mind. One such stock that may fit that description of giving you a trade either way would be that of Guess ?, Inc..

Guess ?, Inc, designs, markets, distributes and licenses apparel and accessories for men, women and children. The company’s apparel is marketed under numerous trademarks including GUESS, GUESS?, GUESS U.S.A., GUESS Jeans, GUESS? and Triangle Design, MARCIANO, Question Mark and Triangle Design, a stylized G and a stylized M, GUESS Kids, Baby GUESS, YES, G by GUESS, GUESS by MARCIANO and Gc. The lines include full collections of clothing, including jeans, pants, overalls, skirts, dresses, shorts, blouses, shirts, jackets, knitwear and intimate apparel.

To review Guess’ stock, please take a look at the 1-year chart of GES (Guess?, Inc.) below with my added notations:

After breaking a major support level at $38 (burgundy), GES 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. In the GES’s case, the Rectangle pattern formed a $35 resistance (red) and a $30 support (green). Eventually, GES will have to break one of those two levels. Judging from the recent attempts to break lower, it looks like it may end up being the support that finally gives.

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 GES is $5 high ($35 – $30), GES 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: GES 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 GES, 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 GES 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: Westport Innovations Inc (NasdaqGS: WPRT)

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 that of Westport Innovations, Inc.

Westport Innovations Inc. is a provider of engine and fuel system technologies utilizing gaseous fuels. The company’s technology and products enable light, medium, heavy-duty and high-horsepower petroleum-based fuel engines to use primarily natural gas. Westport has sold over 30,000 natural gas and propane engines to customers in more than 19 countries. The company leverages its technology by partnering with diesel engine and truck original equipment manufacturers (OEMs) to develop, manufacture and distribute its engines to a group of global truck and bus OEMs. Westport’s business operates in three segments: Cummins Westport Inc. (CWI) which serves the medium- to heavy-duty engine markets; Juniper Engines Inc. (Juniper) which designs, produces and sells high-performance alternative fuel engines, and other which includes Westport Heavy Duty (Westport HD).

To review Westport Innovation’s stock, please take a look at the 1-year chart of WPRT (Westport Innovations, Inc) below with my added notations:

WPRT has been trading sideways for the last 5 months, while running into resistance at $28 (green). That $28 resistance meets my definition of a clear resistance level that would signify an important 52-week high breakout if WPRT could manage to break above it. Yesterday the stock finally broke through that $28 resistance on a volume increase of 200%! This is definitely the “NEW” 52-week high resistance breakout I like to see.  From here, the stock should be heading higher, most likely on a new uptrend.

The Tale of the Tape: While stuck in a sideways move, WPRT has formed a key resistance level of $28, which was a 52-week high breakout since WPRT broke above it. This should signal higher prices ahead for the stock. A long trade could be entered now, or if WPRT pulls back a bit further to $28, with a stop set below the $28 level. If the market were to sell-off substantially, and bring WPRT back down to $20 (dark blue), 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: Apollo Group, Inc. (NasdaqGS: APOL)

With the recent volatility in the stock market, it would be easy to assume that all stocks have broken their respective up trends. Certainly most stocks have, but maybe not all? Stocks that have maintained their trend higher through the current market volatility could be the ones that hold their ground best during any future pullbacks. One such stock holding its current trend higher is that of Apollo Group Inc.

Apollo Group, Inc. is a private education provider. The company offers educational programs and services both online and on-campus at the undergraduate, master’s and doctoral levels through its wholly owned subsidiaries, The University of Phoenix, Inc.; Institute for Professional Development; The College for Financial Planning Institutes Corporation, and Meritus University, Inc. Apollo Group also formed a joint venture with The Carlyle Group, called Apollo Global, Inc., to pursue investments primarily in the international education services industry. The University of Phoenix offers associate’s, bachelor’s, master’s and doctoral degrees in a variety of program areas. The Institute for Professional Development provides program development, administration and management consulting services to private colleges and universities.

To review Apollo Group’s stock, please take a look at the 1-year chart of APOL (Apollo Group, Inc.) below with my added notations:

APOL has been in a steady up trend all year and actually came close to hitting a new 52-week high as recently as a month ago. Along the way, APOL has formed a nice trend line of support (green). Always remember that any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. As you can see, APOL’s trend line is VERY important to the stock. Also, APOL has formed a short term, down trending resistance line (red) over the last several weeks.

The Tale of the Tape: APOL has been steadily trending higher all year and has created a nice trend line of support along the way. A long position could be entered on a pullback to the trend line support, or on a move above the down trending resistance line. A short position could also be entered if APOL broke the trend line of support or at the down trending resistance.

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