____________________________

Even with energy and energy stocks acting reasonably well to start 2012, an airline like JetBlue looks to be as attractive as any long setup our there. Note the bullish volume pattern over the past few weeks, as price has been basing above the 200 day moving average. I like JetBlue on any further strength, so long as the broad market does not sharply reverse lower (in which case most breakouts will fail). Also note earnings on January 23rd. In addition, Southwest Airlines (earnings on 01/19) is basing tightly and could be ready to break out along with JetBlue.

I am not looking at the airlines as a whole for a major sector break out. Instead, I am focusing on the very best setup here. Incidentally, JetBlue and Southwest are considered to be two of the  best-run airline businesses.

____________________________

____________________________

Comments »

As I wrote in this post last week:

In Japanese candlestick theory, the bullish engulfing candle is most viable as a reversal signal after a prior established downtrend. The candle usually follows a small-bodied day, where the bears appear to be close to running out of steam after clearly controlling the price action for quite some time on the given chart’s timeframe. The next candle then “engulfs” that prior candle, with a lower low but also a higher high, and a strong close above the high of the small candle.

As with all reversal candlestick patterns, confirmation is required. Moreover, a bullish engulfing candle on strong buy volume adds credibility to the reversal thesis, since it shows that there may have been both a selling climax with the brief lower low, followed by strong hands coming in to buy the bargain. Note that the bullish engulfing candle amounts to little more than a tease if the lows are quickly breached and the chart sinks further. If confirmed within a week or so via further upside, the idea is that you have at least a tradable bottom in place, with relatively easy stop-loss reference points.

Since then, HomeAway has confirmed the bullish engulfing candlestick with a nice upside move. The issue now becomes making an important higher low to form a more durable move higher.

Another chart that caught my eye from Wednesday is Weight Watchers. We know that the firm is a popular New Years resolution play, so perhaps yesterday’s bullish engulfing candle on high volume is the start of a tradable move. As with HomeAway, watch for upside conformation and note the defined stop-loss point in the even the pattern fails.

____________________________

____________________________

Comments »

 

__________________________

Periods of compression in stocks often lead to explosions. The issue, of course, is identifying and respecting in which direction the breakout comes, minding false breakouts and breakdowns alike. In theory, you could look at any chart and say, “Hey, it could go up, or it could go down!” With that in mind, I look for situations where there is a well-defined trade setup, with tangible factors I can point to as reasons why I am honing in on a particular chart.

At times, that setup can be a potentially enticing long AND short for the same stock. In the case of Under Armor, we have a stock that is either forming a textbook bear flag before it breaks lower with plenty of space to drop, offering a nice short setup. Alternatively, the stock could simply be basing at its 200 day moving average before it moves higher with room to run, offering longs a nice shot at playing the “free air” above. A move back below $72 would have me stalking the short, whereas a run up through $73.40 would have me thinking the bulls are seizing control.

Of course, the stock could simply morph into a broader consolidation pattern, rendering breakout plays futile here. That said, the consolidation in this stock and the nature of the free air both above and below the consolidation makes Under Armor a multi-threat setup candidate. Also note that earnings are on January 23rd.

__________________________

Comments »

In Japanese candlestick theory, the bullish engulfing candle is most viable as a reversal signal after a prior established downtrend. The candle usually follows a small-bodied day, where the bears appear to be close to running out of steam after clearly controlling the price action for quite some time on the given chart’s timeframe. The next candle then “engulfs” that prior candle, with a lower low but also a higher high, and a strong close above the high of the small candle.

As with all reversal candlestick patterns, confirmation is required. Moreover, a bullish engulfing candle on strong buy volume adds credibility to the reversal thesis, since it shows that there may have been both a selling climax with the brief lower low, followed by strong hands coming in to buy the bargain. Note that the bullish engulfing candle amounts to little more than a tease if the lows are quickly breached and the chart sinks further. If confirmed within a week or so via further upside, the idea is that you have at least a tradable bottom in place, with relatively easy stop-loss reference points.

Homeaway, Inc. has been one of many disappointing IPO’s in 2011. After being in a steep downtrend for many months, the stock printed a bullish engulfing candle on Tuesday on strong volume. These beaten-down IPO’s have been left for dead, and are the butt of many jokes amongst traders these days. With technicals and sentiment highly negative, now would be as good a time as any for a stock like AWAY to put in a bottom, with the bullish engulfing candle possibly representing a valuable clue. Let’s look for confirmation to the upside in the coming days.

___________________________

Comments »

_________________________

The good news is that it looks like we are getting some light consolidation to start the holiday-shortened week, which is likely to help the bulls after the sharp reversal higher last week. As has been the case over the past several months, we get a false breakdown after some weak price action and negative sentiment, see a quick move higher, but then fail to see a sustained breakout. Perhaps this time will be different. Either way, some sideways action and an overall benign tape is fine by me at this point, as I am looking for charts to firm up even more before getting more involved with trades.

The bad news is that today is a rather boring session. As you can see below on the 5-minute chart of the SPY, all we have done since this morning’s open higher is essentially make lower highs with higher lows to consolidate sideways.

As an aside, to follow-up on my post last evening about the insurance stocks looking better, I believe VRSK is a name to keep on watch above $40.

_________________________

 

Comments »

 

________________________

Most traders are long gone for the year, having closed theirs books while keeping busy with other activities. For those of you dorking out and sticking around this week, we know that the bulls have regained the short-term initiative after last week’s turnaround Tuesday Santa Claus rally. Here are five potential long ideas to keep on watch for the holiday-shortened week ahead in the market.

________________________

________________________

________________________

________________________

________________________

Comments »