Todays Big Stock: Monsanto (NYSE: MON)

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 MON (Monsanto Co).  Before discussing, please review the 1 yr. chart of MON that I have outlined below, with my added notations:

MON has formed two important levels over the last 6-7 months. The main level to watch is the level of $70 (dark green). As you can see, that level has been tested several times (circles) as both support and resistance. A lower level worth watching on any pullbacks would be $65 (light green).

MON’s earnings release yesterday was received well and the stock broke back above $70, which would have been an expected resistance. When a stock breaks through resistance, a trader will expect it to go higher. As a matter of fact, you can see that 2 out of the 3 times that MON has broken through $70 it has continued higher to at least $75 (blue).  Lastly, you may have already concluded that $75 would be the next level of resistance for MON.

The Tale of the Tape: MON has recently broken above a key area of resistance at $70. Because of this, MON should continue higher towards the next level of $75. A higher risk long position could be entered now, or a lower risk short position entered on a pullback down to the $70 level, if that occurs. Either way, a stop below $70 would be advised.

There are other potential trades on MON. If you cannot get in close enough to $70 to acquire the right risk/reward, a long position could also be entered on a break above $75. Also, a break back below $70 might be a great entry for a short position, in which case a potential long at $65 also comes into play.

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: UTi Worldwide Inc. (NasdaqGS: UTIW )

After my article on FedEx (FDX) last week, I received several emails inquiring about other stocks that may be in the same/similar industry as FedEx. Some traders were simply interested in lesser price stocks than FDX to potentially trade now, while others wanted to watch some of FedEx’s competitors going into their respective upcoming earnings releases. 

After doing a little research, I found (3) potential candidates that I thought were worth keeping an eye on both now and/or going into their earnings releases: UPS, EXPD, and UTIW. We have already analyzed UPS and EXPD, so today we will be looking at UTIW.

Below is a 1 yr. chart of UTIW (UTi Worlwide, Inc.) with my added notations:

Like EXPD, UTIW’s earnings do not come out for another couple of months, so this too is a stock worth making a trade on in the short term if you do not want to wait for the earnings release. UTIW is sandwiched between (2) important levels of $18 and $20.  Currently UTIW is testing the $20 resistance again.

The Tale of the Tape: FDX released its 4th quarter earnings report last week and UTIW is in the same industry. Like UPS and EXPD, UTIW is a lesser-priced alternative to FDX and to those interested, UTIW also has earnings coming up on September 1st. The level of $20 is being tested as resistance and $18 would be expected support if UTIW were to drop lower. Depending on your view and market position, a short position could be entered on a rally up to $20, while a long position could be entered on a break above the $20 level. On the flip side, a long position could also be entered on a pullback to $18 or a short position on a break down below $18.

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: Expeditors International Of Washington (Nasdaq: EXPD)

After my article on FedEx (FDX) last week, I received several emails inquiring about other stocks that may be in the same/similar industry as FedEx. Some traders were simply interested in lesser price stocks than FDX to potentially trade now, while others wanted to watch some of FedEx’s competitors going into their respective upcoming earnings releases.

After doing a little research, I found (3) potential candidates that I thought were worth keeping an eye on both now and/or going into their earnings releases: UPS, EXPD, and UTIW. Yesterday we analyzed UPS, today we will be looking at EXPD.

Below is a 1 yr. chart of EXPD (Expeditors International of Washington, Inc.) with my added notations:

EXPD’s earnings do not come out for another couple of months, so this stock is worth making a trade on in the short term if you do not want to wait for the earnings release. With EXPD, the main level to watch at this point is the $50 level.  If EXPD were to break above the $50 resistance, $55 would be the next level to watch on the way up.

The Tale of the Tape: FDX released its 4th quarter earnings report last week and EXPD is in the same industry. Like UPS, EXPD is another lesser-priced alternative to FDX, but to those interested EXPD also has earnings coming up on August 2nd. The $50 level is the main price to watch now. Depending on your view and market position, a short position could be entered on a rally up to $50, while a long position could be entered on a break above the $50 level. If you are waiting until the earnings release, and the stock is already above $50 at that point, $55 becomes a level of interest. Once the stock is above $50, look for that $50 level to become new support for a potential trade and $55 to be the next level of resistance.

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: United Parcel Service (NYSE: UPS)

After my article on FedEx (FDX) last week, I received several emails inquiring about other stocks that may be in the same/similar industry as FedEx. Some traders were simply interested in lesser price stocks than FDX to potentially trade now, while others wanted to watch some of FedEx’s competitors going into their respective upcoming earnings releases.

After doing a little research, I found (3) potential candidates that I thought were worth keeping an eye on both now and/or going into their earnings releases: UPS, EXPD, and UTIW.

Today we will be looking at UPS (United Parcel Service, Inc.). Below is a 1 yr. chart of UPS with my added notations:

UPS has two important price levels to watch for potential trading entries. The $70 level has been and important area of both resistance and support for UPS throughout the last 10 months, while $75 has been a strong level of resistance. UPS is currently trading between these two levels.

The Tale of the Tape: FDX released its 4th quarter earnings report last week and UPS is in the same industry. UPS is a lesser-priced alternative to FDX, but to those interested, UPS also has earnings coming up on July 26th. The $75 and $70 levels are the prices to watch now, in addition to when earnings are released. Depending on your view and market position, a short position could be entered on a rally up to $75 OR on a break below $70, while a long position could be entered on a pullback to $70 OR on a breakout above $75.

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: 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