Trade ideas for 2/5/09 Life Partners (LPHI), Edwards Sciences (EW), RTI

This is a stock pickers market.  I got three stocks worth trading tomorrow based on Wednesday’s tape.  They can either be day traded or swing traded:

1)  Life Partners (LPHI)

• Rationale:  Wednesday, LPHI was the biggest loser on the IBD 100.  LPHI was a leading stock since late March before losing steam early November.  Late November the stock caught fire and rallied a little higher than its previous high.  That caught shorts off guard.  Wednesday stock was down 11% on higher volume.
• Swing traders:  short this with a stop above 38 which was previous support.  Notice on the 5-day, LPHI rallied Tuesday, but that entire rally has wiped out.  If that gap is filled, then there is a swing trade opportunity on the long side.  However, I think reward is better on the short.
• Day-Traders:  play the gap.  There may be a rally attempt back to 38, so I would enter daytrade shorts if LPHI struggles with 37.xx.

2) RTI Intl Metal

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• Rationale:  Kind of similar to LPHI, except the long term chart for LPHI was nice, while RTI is ugly.  Look at the 5-day chart, you’ll see RTI was up about 10% yesterday for an earnings spike, but nearly all of that is gone + we are back below the roof of that channel.
• Swing traders:  use the 1-month consolidation as your stop point.  I like this as a longer term short.
• Day traders:  play this either way.  You have 13.90 as a selloff point, and 14.20 as a breakout point.

3)  Edwards Lifesciences (EW)

• Rationale:  EW had a runaway rally after reporting good results and outlook on Wednesday.  Stocks high is 66.
• Swing traders:  look for a slight reversal under 60 before getting long.  Buy 1/2 now and 1/2 just below the 52-high.  Set stop for initial position to 58.
• Day traders:  use the flag at the close.  Buy above 60.20 for continued move.  Probably doesn’t move much though.

Other notes:  NYSE notched another distrbution day yesterday.  That makes it 2 distribution days since IBD issued a follow-through day.  Tomorrow will be filled with earnings, so I’m going into tomorrow expecting choppy waters.

Today I jacked a BAC chart from DistressedVolatility .  He uses options activity and volatility indicators for direction on individual stocks.  I’m a fan of the put/call ratio so I think its a good way to track a highly volatile stock… like BAC.

http://2.bp.blogspot.com/_xlGBqqM0muE/SYqZzzP6y7I/AAAAAAAABAg/5N4lAox5YAc/s1600-h/bac3.PNG

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