Real Money Charts (April 14, 2008)

print
Here are the stocks that are featured in tomorrow’s RealMoney article: NWS, PBR, TSL, ECA, CMP and SQM.


 
NWS has been churning in a 10% range for the past few months.  But after a failed breakout above the 50-day moving average, the bears are once again testing support.  The high probability trade is to buy at $18.  Why?  Because it’s worked before — twice!  But if support breaks down, then the prudent move is to sell.  Don’t let “hope” rule your actions here.  If support breaks down, ditch NWS and move on.


 
PBR rose dramatically yesterday on news of a major oil find in Brazil.  If this news turns out to be true, then this 8% move is probably just the start of the next leg higher.  I’d just watch the stock and trade accordingly.  PBR is a solid company with strong fundamentals.  If you can buy it on a pullback, then do it!  But if the stock moves above $125 from here, I think it’s also buyable…so long as your plan includes buying more on a pullback.


 
TSL had been trading downward for the past several months.  But earlier this month, the bulls pushed the stock back above the 50-day moving average on heavy volume.  After a brief period of consolidation, the stock is once again on the move.  I’d be hesitant to buy after such a big move over just two days, but would sure be there on a pullback.  But if the stock pulls too far back–like, back into congestion–that’s an indication that this breakout has not attracted more buyers and it’s likely to move even lower.  That’s why I’d keep a stop back around $35.


 
ECA is back up to test the March high.  And by the looks of the momentum, ECA could be just starting the next leg higher.  While the March high marked the end of a 30% run, the current level is up just 11% since the March low.  So I wouldn’t be so eager to sell ECA on this new high.  Rather, I’d even be a buyer now (with just a partial position), and then hope for a pullback to get more.  If the stock doesn’t pull back, at least I’m involved.  And if it does pull back, I get a great stock at a marked down price.


 
CMP is forming a tight bull flag, and is primed to break out to a new high.  I’d keep a stop just below $67.50, and would be a buyer on a breakout that closes above $70.


 
SQM has been on fire, more than doubling in price from the January low.  I’ve included a 10-day moving average into this chart because it largely defines the extent of pullbacks over the past couple of months.  If you’re long SQM there’s no reason to sell unless the stock closes back below the 10-day moving average.  And if you’re looking to buy?  Why not wait until that key moving average is tested?  That way, you risk little trading capital because you’ll get stopped out with just a small loss.

Be careful out there.

 

 

Real Money

Leave a Comment