Todays Big Stock: Olin Corporation Common Stock (NYSE: OLN)

Thanks to the market rally on Tuesday and Wednesday, a lot of stocks that I am watching have broken back above key areas of resistance. This should be a sign of higher prices for those stocks, even if those moves are only temporary. One stock of many that has broken back above resistance would be that of Olin Corp.

Olin Corporation is a manufacturer concentrated in two business segments: Chlor Alkali Products and Winchester. Chlor Alkali Products manufactures and sells chlorine and caustic soda, sodium hydrosulfite, hydrochloric acid, hydrogen, bleach products and potassium hydroxide. Currently, the Chlor Alkali Products segment represents 65% of its sales. Winchester products, which represent 35% of 2010 sales, include sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges. Its subsidiary, Olin Canada ULC, operates one chlor alkali facility in Becancour, Quebec, which sells chlor alkali-related products within Canada and to the United States. Its subsidiary, Winchester Australia Limited, loads and packs sporting and industrial ammunition in Australia.

Please take a look at the 1-year chart of OLN (Olin Corp) below with my added notations:

OLN has a very important price level at $18 (green). The stock also seems to have another important level at $20 (red) and has found it’s most recent support level at $16 (blue). So, in addition to showing clear levels of support/resistance, OLN is also showing us that it tends to bounce between each $2 increment.

After breaking the $18 level earlier in the week, OLN fell lower, just as a trader would expect on a break of support. Thanks to the market rally of the past two days though, OLN has broke back above the $18 level. If the market rally cooperates, OLN could make its way back up to the $20 area. However, if OLN cannot hold $18 on a pullback, the stock will probably retest the $16 level again.

The Tale of the Tape: After breaking below its $18 level and falling to $16, OLN broke back above that $18 level yesterday. OLN should be moving higher overall from here, even if only for a while. A long position could be entered at or near $18 with a stop below that level. A break back below $18 would negate the forecast for a move higher and a short position would be advised instead with a stop above $18.

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: American Express Company Common (NYSE: AXP)

American Express Company is a global service company whose principal products and services are charge and credit payment card products and travel-related services offered to consumers and businesses around the world. American Express and its principal operating subsidiary, American Express Travel Related Services Company, Inc., are bank holding companies. It is engaged in businesses comprising four reportable operating segments: U.S. Card Services, International Card Services, Global Commercial Services, and Global Network & Merchant Services. Its range of products and services includes charge and credit card products, expense management products and services, consumer and business travel services, stored value products, network services, merchant acquisition and processing, point-of-sale, servicing and settlement, and marketing and information products and services for merchants, and fee services.

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

AXP has a long-standing support level at $42 (red) that was successfully tested again yesterday. Assuming AXP continues higher, $46 (purple) would be the first level of resistance, with $50 (blue) being the next level up. If AXP cannot hold $42, traders can expect the stock to head towards the 52-week low of $38.

The Tale of the Tape: AXP has a strong level of support at $42. A long trade could be entered at $42, or on a break above $46, with a stop placed below the level of entry. If you are bearish, short positions could be entered on a rally up to $46 or on a break below $42. Stops should be placed above the level of entry on any short positions.

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: Simon Property Group, Inc. (NYSE: SPG)

Although I do believe that the stock market has re-entered the larger bear market that started in 2007, the current round of selling is getting a little long in the tooth. Traders should be prepared with stocks that will provide clear entry points for when they believe that the market has bottomed. For example, one stock that has multiple levels on the way down is that of Liberty Global Inc.

Simon Property Group, Inc. is a real estate company. Simon Property owns or has an interest in 392 retail real estate properties, including regional malls, Premium Outlets, The Mills, community/lifestyle centers and international properties comprising 263 million square feet of gross leasable area in North America, Europe and Asia. The company is headquartered in Indianapolis, Indiana.

Before discussing a potential trading opportunity with SPG (Simon Property Group, Inc.), please review the 1 yr. chart of SPG that I have outlined below, with my added notations:

Yesterday, SPG broke a very important level at $110 (red). After breaking that support, the stock should be moving lower from here. The good thing about SPG is that it also has potential levels at $105 (teal), $100 (pink) and $95 (blue). When the market appears to have found its footing, a trader might want to make a trade at whichever of those levels that SPG is testing at that time.

The Tale of the Tape: SPG has broken a key level at $110 and should be moving lower. Regardless of where the market settles down, SPG provides a long entry at $95, $100 or $105. Volatility is elevated and identifying a bottom is certainly a tricky prospect. So, stops should be placed below 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: Marriot International Common St (NYSE: MAR)

Since the response on the articles I wrote for HOT and H has been so high, I decided to include an article for one additional stock from that industry.  So, another stock with a similar chart pattern to HOT and H’s, and within their industry, would be that of Marriot International, Inc.

Marriott International, Inc. is a global operator and franchisor of hotels and related lodging facilities. The company develops, operates, and franchises hotels and corporate housing properties under separate brand names, and it develops, operates, and market timeshares, fractional ownerships, and residential properties under four separate brand names. It also provides services to home/condominium owner associations for projects associated with several of its brands. It operates in five business segments: North American Full-Service Lodging, North American Limited-Service Lodging, International Lodging, Luxury Lodging and Timeshare. It operates, develops, and franchises under separate brand names in 70 countries and territories.

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

Just like H and HOT, MAR has created a couple of short-term price levels over the last month. First, MAR has formed a clear support level at $26 (green). In addition, the stock has been hitting a down trending resistance line (thin red) and a 2 month high at $30 (red). These levels combined have MAR stuck within a congestion area that could ultimately end up being either an Ascending Triangle or a Rectangle, depending on how the pattern unfolds. Regardless of any pattern, MAR will eventually have to come down to $26 or break higher.

The Tale of the Tape: MAR is currently stuck between a few important levels for the stock: The down trending resistance line, the $30 level and the $26 support. A long trade could be made on a break above the $30 level, possibly on a break through the down trending resistance, or on a pullback to the support level at $26. Stops should be placed under the level of entry. On the other side, you could enter a short trade on MAR at the $30 resistance or if the stock breaks below the $26 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: Wynn Resorts, Limited (NasdaqGS: WYNN)

A Head and Shoulders (H&S) pattern is a reversal pattern that forms after an uptrend. The formation of an H&S pattern warns of a potential reversal of the uptrend into a possible downtrend. As with any chart pattern, a trader will usually not want to act on the pattern until the stock “confirms” the pattern. Confirmation is the break of the key level that has been created by the pattern.  In the case of an H&S, confirmation would be when the stock breaks the “neckline”.

Wynn Resorts, Limited is a developer, owner and operator of destination casino resorts. The company owns and operates two destination casino resorts. In Las Vegas, Nevada, it owns and operates Wynn Las Vegas, on the Strip and Encore at Wynn Las Vegas. In the Macau Special Administrative Region of the People’s Republic of China it owns and operates Wynn Macau and Encore at Wynn Macau. It has two segments: Wynn Las Vegas (which includes Encore at Wynn Las Vegas) and Wynn Macau (which includes Encore at Wynn Macau). The Wynn Las Vegas resort offers accommodations, amenities and service with 2,716 rooms and suites, including 36 fairway villas and six private-entry villas for guests.

To review the H&S pattern that formed on Wynn Resorts’ stock, please take a look at the 1-year chart of WYNN (Wynn Resorts Limited) below with my added notations:

WYNN has been on an amazing rally since 2009. Over the last 8 months, WYNN has created a very important level at $130 (red), which is also the “neckline” for the H&S pattern (gray). As the pattern has formed, you will notice that the rising volume requirement on the sell-offs (blue) from the “head” and right “shoulder” is in place. Yesterday, WYNN broke the $130 neckline support on HUGE volume, thus confirming the H&S pattern. The stock should be moving lower overall from here.

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 H&S pattern for WYNN is $40 high ($170 – $130), WYNN should fall to a minimum of $90 ($130 – $40) now that the stock has broken below the $130 level. Chart pattern price targets are certainly not guarantees, but they are often fulfilled.

 

The Tale of the Tape: After embarking on a 2-½ year uptrend, WYNN formed a large Head & Shoulders pattern. WYNN confirmed this pattern yesterday by breaking its $130 “neckline” support and the stock should be moving lower overall. A short trade should be entered as close to the $130 level as possible with a stop placed above the $130 level. If WYNN does not provide an entry near $130, traders should analyze the stock for additional entry points.

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