Real Money Charts (April 16, 2008)
Here are the charts for Wednesday’s Real Money article: FCX, PCU, BA, GE, ETN, and BG.
This little flag pattern between $105 and $110 is a healthy development in the current advance. When a stock moves sideways on declining volume after a big run, it’s a sign of ongoing buying interest (otherwise the stock would be falling on heavy volume). So I’d look for a breakout above $110 as my signal that the next leg higher is in play.
PCU looks pretty much like FCX (which isn’t surprising since they are in the same industry). Here, the stock is consolidation just beneath prior resistance. I’d wait for a breakout above $120 before buying.
Boeing has been advancing over the past month or so, but all it’s done is climb back to where it’s failed before — the 50-day moving average. At the same time, the support and resistance lines are converging, forming a bearish wedge pattern. I’d look to sell Boeing on a move below $75 — or certainly on a move back to the 50-day moving average. Looking for a potential catalyst to push Boeing higher? Let me know when you find one because I can’t.
I covered GE a couple of days ago but have received several emails asking for a follow up. So far, the early March low is holding. The healthiest development for GE would be some additional churning at this level which would slowly soak up all the supply of disheartened bulls who bought at higher levels. Once that supply is exhausted, future buyers will have to pay up to buy the stock.
ETN has been trading in a tight volatility squeeze for quite a while. While the stock advanced almost 2% yesterday after posting strong earnings, the squeeze remains. This is dead money until that changes. But there are two ways to trade it. First, wait for the breakout. That’s obvious. Second, buy as close to support as possible, but use a tight stop.
I know many traders have been looking for an opening to short BG. Here’s my take. First, you’ve got to have a tight stop on the short because of the strong upside volatility we’ve seen over the past couple of weeks. Next, you might want to consider a short just below yesterday’s low…or perhaps waiting for the stock to breach the 50-day moving average. But either way, be mindful that the momentum traders have been all over this one and you don’t want to get caught on the wrong side of that crowd.
Be careful out there.