Setups for Friday 04/09

One of my top picks last night, Westport Innovations Inc ($WPRT), finished the day up 8.48% on three times normal volume.  The reason why I liked the setup so much was because a few days ago the stock had its initial breakout, only to pullback yesterday on benign volume.  My reasoning was that the stock was still breaking out, but merely shaking out some weak hands before continuing higher.

Let’s suppose that you missed that one. Well, your good buddy Chess still has some other “Westport Specials,” as I will refer to that chart pattern from now on.

Notice the similarity of the patterns: bullish setup over the course of weeks or months, a breakout, a gap fill to retest a good part of the move, and then a huge move higher.  Note that both $AIG and $NEP are extremely volatile stocks that attract a large amount of day traders and shorts, so they can get some serious momentum going. However, you only want to be involved with these names when their charts are as close to ideal as possible.  So long as you are disciplined enough to use a stop loss,  I like both of these names here.

Beyond that specific setup, I will refer you to the posts that I wrote earlier today.  We have the beginning of another earnings season coming up on Monday evening with $AA, and I do not think it makes much sense to initiate many new longs tomorrow.   The most probable scenario is that volatility creeps back in to the market during earnings, and I would rather survey the landscape first before making some new big bets.