Real Money Stocks (March 7, 2008)
I heard from a reader who wanted my technical take on some stocks that Jim Cramer has been high on lately, so today we’ll take a look at MDR, JEC, FWLT, CHK, APC, and MOS.
MDR seems to be printing a series of lower highs and lower lows. This is troublesome for the bulls because each successive low makes it tougher and tougher for the stock to reach prior resistance. That makes it increasingly more likely that the stock will roll over. As you can see, that’s exactly what MDR is doing now, with the middle Bollinger Band now starting to act as resistance and not support. I’d require a breakout above $60 before buying. But if the stock instead pulls clear back to $40, I’d also be a buyer for a different reason — an oversold bounce.
JEC broke below its uptrending channel in early January. Since then, the stock has been consolidating at lower levels, but has also struggled to surpass the 50-day moving average. I’d steer clear of this stock until the bulls can push the stock back above that key moving average…unless the bears push it all the way down to prior support at $70. Then I’d buy.
FWLT is in a sideways trend at the upper right corner of the chart. Such sideways churning is typically a healthy development for a stock, and this is no different. With FWLT right at support, this might be a good buy now.
CHK is consolidating a pretty dramatic run up from $35 up to $46 in just about a month. But yesterday’s weakness closed right at support. That means that any further weakness puts the prior breakout ($41) back in play. I’d be careful about buying right now and would rather give the stock a chance to rest.
Is APC putting in a double top? Too soon to tell — after all, the stock is just nearing the December high but has not yet failed. Instead, we’re just seeing a bit of consolidation between $64 and $66. But APC is not in at an ideal buy point right now. If we buy at $64, the stock can fall all the way down to $54 before we really get a test of solid support. Sure, we could put an arbitrary stop down at the 50-day moving average, or down around $60, but what’s the point in that? I’d rather wait for the stock to pull back to a better entry point, or prove itself with a breakout above $68.
MOS continues to impress. Notice how the 50-day moving average continues to run higher, with just an occasional tag by the bears. First, any pullback to the 50-day moving average would be a great buying opportunity. Second, if the stock breaks above the resistance line I’ve drawn, then I’d also be a buyer.
Be careful out there.