The broad markets staged an impressive rally yesterday that resumed the powerful up-trend. Many individual names have positive chart patterns indicating higher prices for the near term. Heavy resistance for SPY is around the 132-133 area. If initiating new longs keep expectations in line with market outlook.
As mentioned previously, the Russell 2000 Index has a potential bearish broadening top formation developing. The pattern has not triggered, while other major indices trend higher. It is important to monitor the divergence between the Russell 2000 Index and the other major indices to determine the health of the up trend. If initiating shorts, select names that have broken their uptrend and have been in distribution patterns.
Below are two long ideas in Changyou.com Ltd. (CYOU) and Lululemon Athletica Inc. (LULU), with smaller expectations, suitable for those that are short term and swing traders.
Chart 1: Changyou.com Ltd. (CYOU) triggered, and confirmed, a breakout of a bullish inverse head and shoulders pattern yesterday. Target: $47, Protective Stops: trigger on a confirmed move back below the neckline (36.35).
Photo: Zev Spiro
Chart 2: Lululemon Athletica Inc. (LULU) is range bound, in a sideways rectangle pattern for approximately six weeks. The price is approaching the upward sloping trend line which may provide upward sloping support and a breakout.
Trigger: breakout above $74, Target: $82, Protective Stops: confirmed move back below the upward horizontal resistance line, which is approximately $74. Trail Stops: confirmed move below the upward sloping trend line, if the price is higher than $74.
Photo: Zev Spiro
**If you are interested in receiving Zev’s free daily market letter, please email [email protected] subject “Insider.”
Disclaimer: The information contained herein is not guaranteed. This is not a solicitation of any order to buy or sell. This material is based upon information that I consider to be reliable, but I do not guarantee its completeness or accuracy. Assumptions, opinions and recommendations contained herein are subject to change without notice, and I am not obligated to update the information contained herein. I may have a position in the security or securities mentioned. This communication, including any attachments, is for the exclusive use of the intended recipient(s) and/or the intended recipient’s designees. Any use, retention or dissemination by a person other than the intended recipient is strictly prohibited. If you are not the intended recipient or designee, please notify the sender immediately by return e-mail and delete/destroy all copies of this communication.