Don't Ignore This Chart

Mondelez Takes Big Hit, But Remains in Bullish Triangle Pattern

Mondelez International (MDLZ) had a rough week, tumbling over 5.5% after Kraft Heinz (KHC) made a bid for Unilever (UL).  That suggested to many investors that the likelihood of a MDLZ acquisition was significantly reduced and the stock was priced lower accordingly.  The technical pattern on MDLZ remains quite bullish, however, so I'd argue that last week's weakness is opening a door for entry.  There are two bullish possibilities here so let's look at the chart:

While last week's losses were obvious, the overall uptrend here is just as obvious.  Weekly RSI in the 40-50 range has generally been a solid entry point into MDLZ and we closed at 46 last week.  Furthermore, MDLZ is currently approaching its key trendline support within a bullish ascending triangle pattern.  I'd respect this trendline because failure to hold it could send MDLZ down to its early 2016 reaction low (black dotted line above).  A trip there could establish a test of price support within a bullish rectangular consolidation pattern.  Either way, MDLZ looks bullish to me in the longer-term.  It's just a question of whether the short-term produces additional weakness.  Last week, MDLZ printed a low of 41.30.  That level down to 40.00 would represent solid short-term entry with a closing stop beneath 40.00.

Happy trading!


Cypress Semi (CY) Tries To Join The Party

Cypress Semiconductor (CY) rallied 2 weeks ago to new 52 week highs. It is still consolidating the breakout but looks well positioned. The volume last week was very low on a pullback compared to the volume on the breakout. That is a really nice bullish sign. This semiconductor stock also kicks out a yield of 3.44% which is a nice value for tech stocks.

Some of the leadership in the Semiconductors have recently started to perform in line with the S&P 500 after outperforming for almost a year. Watch closely, but with a nice tight stop around $12, CY appears to be setting up to move higher if the overall market can continue the run.

Continue reading "Cypress Semi (CY) Tries To Join The Party" »

SRCL Wastes No Time Breaking To Six Month Highs

Stericycle (SRCL) has been under rather intense selling pressure over the past 16 months, losing half its market cap.  The waste management company disappointed Wall Street on several occasions and we've seen major gap downs on heavy volume three times over those 16 months.  The stock seems to have put in at least a near-term bottom with its latest quarterly earnings, which were released Wednesday after the closing bell.  SRCL beat on both its top and bottom lines and it's gapped up on heavy volume today, closing above key six month price resistance.  Check out the chart:

With any strength at all tomorrow, we should see its SCTR clear 30 for the first time in the past 10 months.  One negative was that SRCL closed well off its intraday high of the day, but the close did still manage a breakout and volume was strong, indicative of accumulation.  For those willing to take on a little extra risk in an effort to drum up higher returns, SRCL may have just confirmed that its bottom is in place.

Happy trading!


WBA Turns Up after Deep Correction

Walgreens Boots Alliance (WBA) has traded quite choppy over the last 12 months, but I think the bigger trend is up and the recent wedge breakout is bullish. First, notice that WBA broke above a major resistance zone with the November-December surge. This move forged a 52-week high and set the bullish tone for the long-term uptrend. Second, note that the 200-day slope turned positive in late August. This indicator measures the slope of a 200-day linear regression, which is the line of best fit for 200 data points (closing prices). See our ChartSchool article for more details. 

Continue reading "WBA Turns Up after Deep Correction" »

Bank Of America (BAC) Ends Consolidation Pattern With A Big Bull Push - SCTR

Bank of America (BAC) has been consolidating recently. Today that consolidation ended as BAC made a big bull push out of the consolidation pattern. With a strong SCTR, this was on the radar anyway. Click on this link to understand more about what the SCTR is. However, today BAC broke out to new highs in Relative Strength in purple, price broke to a new high and the volume was well above a high average. The MACD made a nice bullish cross after resetting down near zero. Nice.

Continue reading "Bank Of America (BAC) Ends Consolidation Pattern With A Big Bull Push - SCTR" »

Celgene Stalls within Trend - What's Next?

Celgene (CELG) has not made much headway the last twelve months, but the overall trend is up and the current consolidation looks like a bullish continuation pattern. Taking a step back, notice that CELG doubled from the April 2014 low to the July 2015 high (~70 to ~140). The stock then retraced around 61.18% of this advance with a 30+ percent decline into January 2016. Even though a 30+ percent decline seems long-term bearish, the retracement amount is actually normal for a pullback within an uptrend. Signs of a long-term uptrend are emerging as the stock bounced off the 95-100 area four times from January to October, and forged higher highs in August and November. 

Continue reading "Celgene Stalls within Trend - What's Next?" »

Costco Finally Breaks Out Above Its 15 Month Consolidation Range

After long basing periods, breakouts can be very significant technical events that lead to powerful gains.  Those invested in or trading Costco (COST) are hoping last week's breakout signals a nice advance in the months ahead.  Three months ago, COST bulls successfully defended key price support and the rally that ensued finally broke major price resistance.  Check out the chart:

The last two weeks did see increasing volume to confirm this latest move higher.  The two key levels of support are now price support near 169 and the rising 20 week EMA, currently at 159.53.  Seasonally, February and March have been decent months for COST over the past 20 years so historical performance shouldn't be a hindrance at all.

Happy trading!


Is Alibaba BABA Ready To Pop?

Alibaba (BABA) has been building a consolidation pattern recently. After pulling back for four months, BABA started to turned higher. In the zoom box you can see the gap up on earnings. Now the stock is trying to break through the top of the cup and handle setup at $104.57.

Continue reading "Is Alibaba BABA Ready To Pop?" »

Mohawk Reports Strong Earnings, Looks To Break Out On Friday

Mohawk Industries (MHK), a flooring designer and manufacturer, just reported quarterly earnings that exceeded Wall Street consensus estimates.  The initial reaction in after hours is very bullish as MHK has been consolidating in sideways fashion for the better part of a year and the after hours price would constitute a significant breakout.  Here's a look at the current technical picture:

MHK has been bouncing off rising 20 day EMA support and its SCTR rank has been trending higher since the stock put in a double bottom in early November.  Volume trends are strong and tonight's earnings beat could very well be the catalyst to jump start a nice rally here.

Happy trading!


Expeditors Hits Reversal Zone and Turns

Expeditors International of Washington (EXPD), a logistics services provider, is part of the Dow Transports and the Industrials SPDR. The stock caught my eye because it is in a long-term uptrend and recently pulled back to a potential reversal zone. First, the long-term trend is clearly up because the stock hit a 52-week high in early December. Also notice that the 50-day EMA is above the 200-day EMA and the stock is above its rising 200-day EMA.

Continue reading "Expeditors Hits Reversal Zone and Turns" »