Todays Big Stock: HMS Holdings Corp (NasdaqGS: HMSY)

The stock market has had a rough week or two and most stocks seem to be breaking lower. However, there are a few stocks still maintaining an overall trend higher. In addition, there are the rare few that have hit 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.

When it comes to trading 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. One such stock that fits that description would be that of HMS Holdings Corp.

HMS Holdings Corp. provides a variety of cost containment, coordination of benefits and program integrity services for government and private healthcare payers and sponsors. HMS’s clients are state Medicaid agencies, government-sponsored managed care plans, Pharmacy Benefit Managers, child support agencies, the Veterans Health Administration, the Centers for Medicare & Medicaid Services, commercial plans, self-funded employer plans and other healthcare payers. Coordination of benefits services route claims already paid by a government program to the liable third party, which then reimburses the government payer.

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

As you can see, HMSY has been in an overall sideways move for most of the year. Meanwhile, that stock has run into a clear resistance at $28 (red). Even though the market has caused most stocks to break lower, HMSY has broken through $28, which was breaking to both a new 52-week high and through a clearly defined resistance level. Last week HMSY pulled back down to the $28 and is currently testing it as new support (green).

The Tale of the Tape: HMSY formed a key resistance level of $28, which was a 52-week high breakout when the stock broke above it. This should signal higher prices ahead for the stock. A long trade could be entered if HMSY pulls back to $28, with a stop set below that level. If the market were to sell-off substantially, and bring HMSY back down below $28, a short position could be entered with a stop above 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

Monolithic Power Systems, Inc. (NasdaqGS: MPWR)

Monolithic Power Systems, Inc. is a fabless semiconductor company that designs, develops and markets analog and mixed-signal semiconductors. Monolithic Power combines advanced process technology with its analog designers to produce high-performance power management integrated circuits for direct current to DC converters, light emitting diode drivers, cold cathode fluorescent lamp backlight controllers, Class-D audio amplifiers, and other linear integrated circuits. The company has Its products are used in computing and network communications products, flat panel televisions, set top boxes and a range of consumer and portable electronics products. Monolithic Power operates in Taiwan, China, Korea, Japan and Europe. Its products include DC to DC converters, lighting control products and alternating current (AC)/DC offline solutions and audio amplifiers.

Before discussing the potential trading opportunities with MPWR (Monolithic Power, Inc.), please review the 1 yr. chart of MPWR that I have outlined below, with my added notations:

MPWR seems to have created (2) very important price levels in which to trade off of. First, the $13 resistance (maroon), which was also previous support in March. Second, the $11 level (navy) has been support both before the September drop and after the early October rally. MPWR is currently trading in between those (2) levels and appears to be on its way down to the $11 level again.

The Tale of the Tape: MPWR is trading between (2) important price levels at $11 and $13. A rise to the $13 resistance would be a great opportunity to enter a short trade, while a break above that $13 could be a nice long trade. A trader could also enter a long trade on a pull back down to the $11 support, or a short trade on a break below the $11.

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: Transocean Ltd (NYSE: RIG)

Whether the market goes up, or the market goes down, I like to trade stocks thatforecast their movement either way. In other words, stocks that seem to tell me how to trade them. This could be in the form of a pattern, visibly important levels,or maybe a little bit of both. If you can find stocks that clearly show you their mostimportant price points, then you will most likely be setting yourself up for success.Bottom line: Knowing where to get in is half the battle. One stock of many that Ithink fits that description would be that of RIG (Transocean, Ltd).

Transocean Ltd. (Transocean) is an international provider of offshore contractdrilling services for oil and gas wells. Transocean operates in two segments:contract drilling services and other operations. Contract drilling services, thecompany’s primary business, includes contracting Transocean’s mobile offshoredrilling fleet, related equipment and work crews primarily on a day rate basis todrill oil and gas wells. Its other operations segment includes drilling managementservices, and oil and gas properties. It participates in oil and gas exploration andproduction activities.

To review potential trading opportunities on Transocean’s stock, please take a lookat the 1-year chart of RIG (Transocean, Ltd) below with my added notations:

Notice all of the important price levels I have highlighted on RIG. The stock seemsto always find support or resistance on or at the increments of $5. For the first (4)months of the year RIG held a very important support level at $75. Once RIG brokethat support, down it went. Then RIG broke its $70 level, down it went. Next up wasthe $65 level, break, lower it went. Once the stock broke $60, $55 didn’t stand achance, but $50 held it’s ground for a while. Every time RIG broke a level of $5, thestock went lower. Did you also notice that every time RIG rallied it found resistanceat those previous support levels of $5? Next up, the 52-week low support at $45.

The great thing about RIG is that it shows you how to trade it no matter whatdirection the market moves. If you like the short side of the market, you can shortRIG on rallies back up to any $5 level. If you want a long play, you could buy RIG onany pullback to a $5 level or breakout through one of those levels.

The Tale of the Tape: RIG finds the levels of $5 important. These price pointsalways appear to act as either support or resistance and usually both. You can tradethis stock no matter what it does. If it rallies back up to $50, you could enter a shortplay. If it breaks back above $50, you could enter a long play. You could buy RIG nowas it sits on $45, or short the stock if it breaks that $45 support. Etc., etc., etc!

Before making any trading decision, decide which side of the trade you believe givesyou 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 aboutit, 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 orsupport level? Making these decisions ahead of time will help you decide which sideof the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember touse protective stops and you’ll be around for the next trade. Capital preservation isalways key!

Good luck!

Christian Tharp, CMT

 

Todays Big Stock: AuRico Gold Inc. (NYSE: AUQ)

It can be challenging to know what trade to make and when to make it, but there are those trading opportunities that are clear and somewhat obvious. Usually, the “keep it simple stupid” trades tend to be the best anyway. Keep in mind that regardless of simple or not, that doesn’t necessarily mean the trade will always work out in your favor. One stock that appears to have a “simple” trading opportunity would be that of Aurico Gold, Inc.

AuRico Gold is a mining company, which also engages in the exploration for, and development of, gold and silver deposits in Mexico. Through its subsidiaries, Aurico owns and operates the Ocampo gold-silver mine in Chihuahua State, Mexico, and the El Cubo gold-silver mine in Guanajuato State, Mexico, both of which are producing gold and silver. Through its subsidiaries, Aurico also owns the Guadalupe y Calvo gold-silver exploration project in Chihuahua State, Mexico, and leases the Las Torres gold-silver mine in Guanajuato State, Mexico, which is also producing gold and silver.

Before discussing potential trading opportunities, please take a look at the 1-year chart of AUQ (Aurico Gold, Inc.) below with my added notations:

Pretty straightforward trade, isn’t it? AUQ has been holding a very important level of support in the area of $9 (navy) for the last 8 months. No matter what the market has or has not done this year, AUQ has not broken below that general area of support.  If the market should move lower, ACTG will most likely retest its support level for a potential trade. On any rallies, do not forget about the $11 level (purple) as a potential resistance.

The Tale of the Tape: AUQ has held a very important support level at $9 since May. If the stock were to approach that level again, a trader could enter a long position with a stop under that level. If AUQ were to break that support, a short position could be made with a stop above the $9 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: Sotheby’s (NYSE: BID)

No surprise, stocks are starting to break down again. With the market selling we’ve seen over the past week or so, a lot of stocks are breaking below key areas of support.  However, these breaks simply provide new trading opportunities. One stock in particular that broke down yesterday would be that of Sotheby’s.

Sotheby’s is an auctioneer of authenticated fine and decorative art, jewelry and collectibles. Sotheby’s operations are organized under three segments: Auction, Finance and Dealer. Sotheby’s Auction segment functions principally as an agent by offering authenticated works of art for sale at auction and by brokering private sales of artwork. Sotheby’s also operates as a dealer in works of art through its Dealer segment, conducts art-related financing activities through its finance segment and is engaged, to a lesser extent, in brand licensing activities. Sotheby’s Finance segment provides certain collectors and art dealers with financing, secured by works of art it either has in its possession or permits borrowers to possess.

Before discussing potential trading opportunities, please take a look at the 1-year chart of BID (Sotheby’s) below with my added notations:

BID has commonly found support at the $30 level (green). At the end of September, BID broke that support and proceeded to fall down to $25 (navy).  Since then, BID has broken back above the $30, went higher as expected, and found support at the $30 level again. Yesterday BID broke the $30 once more. The stock should be moving overall lower from here, probably back down to the $25 level.

The Tale of the Tape: BID has broken its level of support at $30 and the stock should be moving lower. A short position could be entered on a rise back up to $30 with a stop placed above that level. If the stock makes it down to $25, or breaks back above $30, a long trade could also be made with a stop 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