Real Money Charts – March 3, 2008
Here are Monday’s Charts on RealMoney: FLS, MA, RIO, PCP, TRLG and WFT.
FLS has been a rising star after getting repeated mention on Fast Money as a favorite of our favorite Value Girl, Karen Finerman. After announcing blowout earnings on Thursday, as well as a big stock buyback and dividend increase, the stock rocketed up above $110. But Friday brought just a bit of a hangover into the trading day, though the stock remains remarkably strong. But to give a sense of how far the stock is away from its average price range, I’ve used the 50-day moving average as the central reference for Bollinger Bands rather than the faster 20-day moving average. This produces even wider bands, but Thursday’s advance still took the stock outside the upper Band. Because of such an extreme price dislocation, I’d wait for a bit of a pullback. And if the stock doesn’t pull back? Well, we missed the trade. In this tough market environment, discipline gets a higher score than enthusiasm. Go for the high score!
MA has been struggling since early December. I’ve highlighted what looks to be a double top at $220. Also, I’ve circled the three most recent turns. Notice that they are on either side of the 50-day moving average. In my approach, that defines a stock that’s not trending. As such, I’d just stay away from this one unless it falls way below the 50-day moving average.
RIO is struggling to break to a new high. This weekly chart shows resistance at $37.50 and a rising support line that connects the extreme lows. I’d focus on discipline here. With the stock potentially rolling away from resistance, I’d look for a better entry in the low $30’s.
The latest rally in PCP has failed to even test the 50-day moving average. That makes me really cautious, and I’d look to short this on on a breakdown below $110.
This weekly chart shows exactly what a range bound stock looks like. TRLG has been trading between around $15 and $22 for the past couple of years. With the stock so close to resistance, now isn’t the time to buy — it’s the time to sell. If you like TRLG, buy the jeans…not the stock.
I’ve circled the extreme highs and lows on WFT. This is another stock that is just not trending. Volatile, yes; trending, no. While the stock fell from $72 down to $52 and back up to $72 over the past 2 months, it remains bound by excess supply at $72. If you’re long, re-think that position.
Be careful out there.