Quite a few stocks in the aerospace and defense sector should be closely watched for breakouts. We have an overlooked sector here that traders usually forget about until it is too late.
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It appears as though we are still consolidating today, as opposed to seeing a high energy upside breakout after the past few days. Particularly for swing traders, your price entries do matter and often play a role in how well you can patiently sit through each digestion. After all, bull runs take the stairs up, not the express elevator. Thus, there will be plenty of days before we reach the top where it seems like we are topping, but in reality we are just slowly grinding higher.
Inside 12631, we are in quite a few long swing trades from lower prices and are sitting tight during this consolidation. The focus remains on looking for continued rotation to other parts of the market setting up and re-setting behind the leaders, such as fertilizers like CF MON MOS SQM.
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It is natural to think of HOG and its classic and cutting edge motorcycles when conjuring up images of “recreational” forms of outdoor products. HOG‘s chart, however, has been lagging and is still trying to reconcile a declining 50 day moving average. While that is happening, though, two other recreational vehicle stocks are looking better by the day, in ACAT and PII. Hat tip to 12631 member @jmcookjr for pointing out the hot action there this morning in our chat room. Note that buy volume is running above average for both stocks as PII breaks out and ACAT tries to emerge from a tight technical base.
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Full-service restaurant operator Bob Evans is one of those staples of the heartland in the midwest, namely Ohio and Indiana. For you fundamentals guys, the stock is trading at a very reasonable PE, with solid earnings and a positive current ratio. For me, though, that is not enough to keep the stock on watch.
Instead, looking at the technicals, we now see the daily chart moving averages lined up properly (20 day m.a., then 50 day, then 100, etc) and are all rising with price above them, consolidating into a narrowing channel. I am looking for a push through $41 to get the breakout going.
Seeing as BOBE is one of those under the radar stocks, I have also included a few other ideas that not many traders are watching. Some of these issues trade rather thinly, so be careful if placing market orders.
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On the weekly chart of Wells Fargo below, not that each time the stock has popped its head above $34–specifically $34.25–in recent years it has been met with a heavy bout of selling. Indeed, price has memory. However, this time around Wells has not seen heavy supply hit with its recent adventure up to these multi-year levels. In other words, the stock is coming to terms much better this time around with this key resistance level, and the presumption is that much of the supply over the past few years has been worked off, meaning everyone who wanted to sell up here likely has already done so.
I am currently long WFC inside 12631 with some nice cushion on a winning trade, and positioned for a major breakout here in the coming weeks. Should the stock break below $33.50 with heavy selling coming back in I would be compelled to reconsider the position and bull thesis.
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With plenty of stocks breaking higher today along with the senior indices, perhaps a day or two of sideways action on the major averages is in order. However, individually I am looking for the next batch of setups basing tightly to break higher, which would be another sign of a strong bull.
Monitor the following to see just how strong this move is.
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