Real Money Charts (April 22, 2008)
Here are today’s Real Money charts: RIMM, DELL, CHK, AVY, and IFC.
After really taking it on the chin in January, RIMM has now climbed all the way up surpass resistance. Now, volume could be a bit stronger, but I like the upside resolution of this bullish “flag” pattern that has formed over the past few weeks. I’d keep a stop right back around $115. If this breakout is for real, no way should that stop get hit.
DELL has been trading in a pretty tight range for most of the year. Notice how the sideways action allowed the 50-day moving average enough time to fall down and drop right into the middle of the action? When this occurs, I start to think that a base is being formed. I’d be convinced that the stock is breaking out of that base if it moves above $21 on heavy volume. Until then, it’s still rangebound.
CHK has been a crowd favorite for a while. The recent high-volume breakout above $50 is significant because that is precisely where the bulls faded back in March. But this is starting to become pretty volatile now, so I’d try keeping a looser stop than normal to allow for deep pullbacks. I’d use the 50-day moving average as my reference point, and keep a trailing stop just below that line.
This daily chart of AVY looks a heck of a lot like the daily chart of Toll Brothers (TOL). Each time the bulls test prior resistance, they fail the test! So while the stock is now making higher lows, I’d still be a seller until it breaks decisively above resistance. What’s “decisive”? You’ll know it when you see it!
IFC is a fairly thinly traded stock that is in a pervasive downtrend. Why? Check the second word in its name. Financials are still the red-headed step children of Wall Street (no offense to red headed step children) and I’m still very leery of them. But if you like the volatility in this stock, then try waiting for a pullback to support before buying. Would I short this stock now? Uh…no! With such a thinly traded stock, any big buyer will blow you right out of the water with a nasty short squeeze. Better to just buy Potash (POT) and be done with it.
Be careful out there.