The major market indices continue to trade in a volatile range. Below is a macro long idea for MicroStrategy Inc. (MSTR) and a short opportunity in RealPage, Inc. (RP).
Chart 1: MSTR: A macro bullish continuation inverse head and shoulders pattern began developing in 2007. The pattern triggered with a breakaway gap, on January 26, which stemmed from the 2010 4Q results. The minimum expected price objective of the pattern is $182, obtained by measuring the height of the pattern and expanding higher by the same distance, from the trigger point.
Chart 2: MSTR: After the macro pattern triggered, the price climbed steadily until a recent consolidation, which formed a bull flag pattern. Last week’s breakout of the bull flag pattern provides a current buy-entry opportunity. Waiting for a pullback to the breakout, around $120, would have less risk, although, it may not pull back to that level. Target: $182, is the minimum expected macro objective. Protective stop: confirmed move below the bottom of the flag, which is at $114.30.
Chart 3: RP: A complex bearish head and shoulders pattern triggered on February 25th. Currently, a low-risk opportunity presents itself by shorting a bounce versus the neckline, which is resistance of the pattern. The neckline is currently around the $26 level. Target: Minimum expected price objective is 18 dollars, Protective stops: may be activated on a confirmed move above both, the neckline and the 50-day Simple Moving Average (SMA).
1) STRI: http://www.businessinsider.com.au/no-more-sunshine-for-stri-2011-2: approaching the short term target of $15. Conservative stops may now be trailed down to a confirmed move above $18.
2) PCX, ANR, AOS, MON, MAN: http://www.businessinsider.com.au/5-stocks-to-short-2011-3: None of these setups have triggered yet but all are still valid.
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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 have positions in MSTR, STRI, PCX, ANR and MON. 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.