Todays Big Stock: Crosstex Energy, Inc. (NasdaqGS: XTXI)

For today’s stock, I am going to stick with last week’s 52-week high topic that was reviewed on THOR. So, 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 Crosstex Energy, Inc.

Crosstex Energy, Inc. is engaged in the gathering, transmission, processing and marketing of natural gas and natural gas liquids through its subsidiaries. Currently, the company owns 25% of the interest in Crosstex Energy, L.P. through its wholly owned subsidiaries. The Crosstex partnership is an independent midstream energy company. Crosstex Energy GP, LLC, a wholly owned subsidiary of the company, is the general partner of the partnership, which owns a 2% general partner interest and all of the incentive distribution rights in the partnership. The partnership focuses on the gathering, processing, transmission and marketing of natural gas and natural gas liquids, which the partnership manages as regional segments

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

XTXI has been repeatedly running up against the $15 resistance (red) for the last 4 months. That $15 resistance meets my definition of a clear resistance level that would signify an important 52-week high breakout if XTXI could manage to break above it. At the same time, XTXI seems to have formed an up trending support (green) level that appears to be around $13 at this time.

The Tale of the Tape: XTXI has formed a key resistance level at $15, which would be considered a 52-week high breakout if the stock can break above it. A long trade could be entered on a breakout above $15, or if XTXI pulls back a bit further to the up trending support level near $13, with a stop set below either entry 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: Cooper Industries, plc (Irelan (NYSE: CBE)

Sticking with yesterday’s GPRO theme, sometimes you can actually come across a stock where the trade is obvious. I don’t necessarily mean obvious to a seasoned trader, I’m referring to a trade that even a new trader can see is obvious. A stock that appears to have that very clear trading opportunity would be that of Cooper Industries Plc.

Cooper Industries is engaged in the manufacturing, marketing and selling of electrical products and providing services worldwide. Cooper has manufacturing facilities in 21 countries. Operations in the United States are conducted by wholly owned subsidiaries of Cooper. The company has two segments: Energy and Safety Solutions and Electrical Products Group. The company serves four markets: the industrial, commercial, utility and residential markets. Cooper also serves the electronics and telecommunications markets. Markets for Cooper’s products and services are worldwide, though the United States is the primary market. In July 2010, Cooper and Danaher Corporation completed the formation of a joint venture combining its Tools business with certain Tools businesses from Danaher’s Tools and Components Segment.

Before discussing potential trading opportunities, please take a look at the 1-year chart of CBE (Cooper Industries Plc) below with my added notations:

As you can see from the chart above, CBE had a clear level of resistance at $50 (red). The stock had successfully tested that level 2-3 times over the last 2 months. Now that the stock has broken above that level, $50 is acting as support (green) just as a trader would expect.

The Tale of the Tape: The current trading opportunity on CBE is relatively simple: Buy on a pullback to $50, with a stop placed under that level. However, if the stock were to break that $50 level, a short trade could also be made in expectation of a fall to the $44-45 area.

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: Gen-Probe Incorporated (NasdaqGS: GPRO)

Sometimes you can actually come across a stock where the trade is obvious. I don’t necessarily mean obvious to a seasoned trader, I’m referring to a trade that even a new trader can see is obvious. A stock that appears to have that very clear trading opportunity would be that of Gen-Probe, Inc.

Gen-Probe Incorporated is engaged in the development, manufacturing and marketing of molecular diagnostic products and services, which are used to diagnose human diseases, screen donated human blood, and ensures transplant compatibility. Gen-Probe’s molecular diagnostic products are designed to detect diseases and engaged in the categories of the in vitro diagnostics industry. The company markets a range of nucleic acid tests, to detect infectious micro-organisms, including those causing sexually transmitted diseases, tuberculosis, strep throat, and other infections. In December 2010, the Gen-Probe acquired Genetic Testing Institute, Inc. (GTI Diagnostics), a manufacturer of transplant diagnostic products, in addition to specialty coagulation and transfusion-related blood bank products.

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

As you can see from the chart above, GPRO has a very strong support level at $55 (navy). The stock has successfully tested that level 6-7 times over the last 3 months. A trader that might go long at $55 can also see that the stock tends to stall in the general $60-62 resistance zone (red).  If the stock were to finally break lower, there is a previous resistance area of $50 (pink) that may come back into play for a long trade.

The Tale of the Tape: The current trading opportunity on GPRO is relatively simple: Buy on a pullback to $55, with a stop place under that level. However, if the stock were to break that $55 level, a short trade could also be made in expectation of a fall to $50.

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: Northrop Grumman Corporation Co (NYSE: NOC)

Northrop Grumman Corporation is an integrated enterprise consisting of businesses that cover the entire security spectrum, from undersea to outer space and into cyberspace. Northrop operates in four segments: Aerospace Systems, Electronic Systems, Information Systems and Technical Services. In April 2009, the company acquired Sonoma Photonics, Inc., as well as assets from Swift Engineering’s Killer Bee Unmanned Air Systems product line. Last year the company separated its shipbuilding business through a spin-off of its subsidiary, Huntington Ingalls Industries, Inc.

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

After breaking a key level of $60 (blue) in August, NOC 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 NOC, the Rectangle pattern has formed a $55 resistance (red) and a $50 support (green). The stock will have to break through 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 NOC is $5 high ($55 – $50), NOC should climb to a minimum of $60 ($55 + $5) if it breaks above $55 or fall to $45 ($50 – $5) if the stock breaks below the $50 level. Chart pattern price targets are certainly not guarantees, but they are often fulfilled.

The Tale of the Tape: NOC 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 NOC, a trader could enter a long position at the $50 support or a short position on a rise to $55. 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 NOC were to break above $55 or a short position if the stock breaks below $50.

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: Thoratec Corporation (NasdaqGS: THOR)

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 Thoratech Corporation.

Thoratec Corporation is a manufacture of mechanical circulatory support with a product portfolio to treat a range of clinical needs for advanced heart failure patients. The Company develops, manufactures and markets medical devices used for circulatory support. Its primary product lines are the ventricular assist devices: the HeartMate II Left Ventricular Assist System, the HeartMate Left Ventricular Assist System, the Thoratec Paracorporeal Ventricular Assist Device, and the Thoratec Implantable Ventricular Assist Device.

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

THOR has been trading sideways for the last 5 months, while running into resistance at $36 (navy). That $36 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.  The stock finally broke through that $36 resistance last week. 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.

Be aware though, THOR tried to breakout back in July only to fail and fall back down to the $30 support level (green).

The Tale of the Tape: THOR had formed a key resistance level of $36, which could be considered a 52-week high breakout since THOR broke above it last week. This stock should be moving higher from here. A long trade could be entered now, or if THOR pulls back a bit further to $36, with a stop set below the $36 level. A break below $36 would negate this forecast and might signal another fake out such as in July. If the market were to sell-off substantially, and bring THOR back down to $30 (green), 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