When it comes to finding stocks that are more likely to go up than down, nobody has a crystal ball. What we do have, however, is evidence that we can weigh, compare and, if necessary, massage — but only a little. I liken chart analysis to a judging a civil trial in the courts. We look for a preponderance of evidence to make our judgment to buy, sell or hold, and right now I see a good case to buy Tesaro (NASDAQ: TSRO).  Tesaro is an oncology-focused biopharmaceutical company, and that is its first bit of evidence. Biotech… Read More

When it comes to finding stocks that are more likely to go up than down, nobody has a crystal ball. What we do have, however, is evidence that we can weigh, compare and, if necessary, massage — but only a little. I liken chart analysis to a judging a civil trial in the courts. We look for a preponderance of evidence to make our judgment to buy, sell or hold, and right now I see a good case to buy Tesaro (NASDAQ: TSRO).  Tesaro is an oncology-focused biopharmaceutical company, and that is its first bit of evidence. Biotech as a sector is beating the market and in fairly good shape. A strong sector is a big part of a stock’s strength, so this goes in the plus column.  The next is the big picture. Since peaking in June of last year, roughly a year after it began trading as a public company, the stock eased lower for many months. Weekly charts show a clear declining trendline from that time and a somewhat less clear parallel channel guiding it lower.  This is not a positive on its own, but it does leave us with a good trigger for the… Read More

While hot new stock offerings such as Alibaba Group (NYSE: BABA) and news-rocked fads such as Ebola-proof hazmat suit maker Lakeland Industries (NASDAQ: LAKE) may get your juices flowing, who says making money has to be so exciting?  Indeed, I found an investor guide from 1960 saying just that. Clearly, investors over the decades keep forgetting that slow and steady really can pay off. Take women’s clothing retailer Cato Corporation (NYSE: CATO). Many of its peers sport high levels of volatility, yet most of these “exciting” stocks are either chopping around in ranges or in actual… Read More

While hot new stock offerings such as Alibaba Group (NYSE: BABA) and news-rocked fads such as Ebola-proof hazmat suit maker Lakeland Industries (NASDAQ: LAKE) may get your juices flowing, who says making money has to be so exciting?  Indeed, I found an investor guide from 1960 saying just that. Clearly, investors over the decades keep forgetting that slow and steady really can pay off. Take women’s clothing retailer Cato Corporation (NYSE: CATO). Many of its peers sport high levels of volatility, yet most of these “exciting” stocks are either chopping around in ranges or in actual bear markets.  For example, in the first half of this year, Urban Outfitters (NASDAQ: URBN) soared and then abruptly gave up all of its gains and then some. That is not the kind of excitement that I want in my portfolio. But CATO has been above the fray. Since mid-April, it is up over 45%, but it was absent in financial media until making a breakout move Wednesday. The stock peaked in early September near $36, and then settled into a sideways range until this week’s breakout. We can argue whether the pattern traced out was… Read More

The restaurant sector has its share of winners and losers, often decided by changing diner whims. It may take an army of demographic experts to find the next big thing, but the stock market offers its own clues. And the chart of Noodles & Company (NASDAQ: NDLS) suggests it is ready to move. Noodles & Company is a casual restaurant chain focusing on noodle and pasta dishes from around the world from Pad Thai to mac and cheese.  The stock now looks ready to burst higher from its technical chart pattern. NDLS came public in… Read More

The restaurant sector has its share of winners and losers, often decided by changing diner whims. It may take an army of demographic experts to find the next big thing, but the stock market offers its own clues. And the chart of Noodles & Company (NASDAQ: NDLS) suggests it is ready to move. Noodles & Company is a casual restaurant chain focusing on noodle and pasta dishes from around the world from Pad Thai to mac and cheese.  The stock now looks ready to burst higher from its technical chart pattern. NDLS came public in June 2013, at $18 a share, and more than doubled on its first day of trading. Two days later, it topped out just under $52. Since then, the stock suffered a torturous decline, falling to a low of $17.15 two months ago, punctuated by a huge drop in August on an earnings miss. But trading has been looking up for several weeks with shares advancing to their current price above $22. #-ad_banner-#Even better, the pattern formed since August is an inverted or upside down head-and-shoulders. This pattern is marked by a set of lows surrounding a lower, and… Read More

Peter Lynch, the legendary portfolio manager of the Fidelity Magellan fund until his retirement in 1990, said that investors can find great stocks by simply walking around the local shopping mall. Wherever there are crowds lined up to buy from a company, chances are its stock is a good investment.  Based on this theory, my own reconnaissance tells me that shares of Dunkin’ Brands (NASDAQ: DNKN) will soon be back in rally mode. #-ad_banner-#After a solid 2013, the stock peaked in March of this year. It’s been a rough road since then, culminating in a 7.3% drop at… Read More

Peter Lynch, the legendary portfolio manager of the Fidelity Magellan fund until his retirement in 1990, said that investors can find great stocks by simply walking around the local shopping mall. Wherever there are crowds lined up to buy from a company, chances are its stock is a good investment.  Based on this theory, my own reconnaissance tells me that shares of Dunkin’ Brands (NASDAQ: DNKN) will soon be back in rally mode. #-ad_banner-#After a solid 2013, the stock peaked in March of this year. It’s been a rough road since then, culminating in a 7.3% drop at the open on July 24, after the company reported a shortfall in second-quarter sales.  Technically, we can call it a selling climax or capitulation based on the large price movement and huge volume. With the supply of shares finally dried up, the stock started to come back. The trend since then has actually been to the upside, albeit with many bumps along the way. Fast forward to Thursday when the company again reported lower-than-expected sales for the third quarter despite beating earnings estimates. Once again, the stock cratered on the open, this time by 5.5%, only to be followed by… Read More

If there ever were a teaching moment in the stock market, it was this week. Earnings, trendlines and whizbang strategies take a backseat to sentiment when fear in the market turns to panic. But to paraphrase Warren Buffett, when everyone is fearful perhaps there is an opportunity to be greedy.  Airline stocks took a big hit as two health care workers treating the country’s first Ebola patient also contracted the disease. It was not that these workers caught the deadly virus while flying, but that one flew in a regular passenger jet just a day before showing symptoms. Suddenly “everyone” thought… Read More

If there ever were a teaching moment in the stock market, it was this week. Earnings, trendlines and whizbang strategies take a backseat to sentiment when fear in the market turns to panic. But to paraphrase Warren Buffett, when everyone is fearful perhaps there is an opportunity to be greedy.  Airline stocks took a big hit as two health care workers treating the country’s first Ebola patient also contracted the disease. It was not that these workers caught the deadly virus while flying, but that one flew in a regular passenger jet just a day before showing symptoms. Suddenly “everyone” thought that flyers are at risk and airline profits would nosedive. #-ad_banner-#I cannot address the health concerns, but when I see a stock such as Delta Air Lines (NYSE: DAL) down more than 20% in just the past few weeks, I tend to believe the selling is overdone. That can be an opportunity to play the rebound. Be careful to note that I am not looking for the start of a major bull run, as this chart is not very different in form, aside from its extreme sentiment, from the market itself. The 2012 rising trendline is broken to the downside,… Read More

In the post-financial crisis world, many cherished technical indicators and techniques stopped working as expected. The poster child is trading volume, which has been nearly useless on a market-wide basis. And for individual stocks, many basic chart setups led to false starts and quick stop outs. #-ad_banner-#It is therefore refreshing to see a chart pattern working as it is supposed to work, even with the little glitches that seem to linger. That does not guarantee success, but for a stock such as semiconductor maker Altera (NASDAQ: ALTR), the technicals are lining up nicely. Before getting into the chart, Altera benefits… Read More

In the post-financial crisis world, many cherished technical indicators and techniques stopped working as expected. The poster child is trading volume, which has been nearly useless on a market-wide basis. And for individual stocks, many basic chart setups led to false starts and quick stop outs. #-ad_banner-#It is therefore refreshing to see a chart pattern working as it is supposed to work, even with the little glitches that seem to linger. That does not guarantee success, but for a stock such as semiconductor maker Altera (NASDAQ: ALTR), the technicals are lining up nicely. Before getting into the chart, Altera benefits by being a member of the technology sector, which is a leader in the market today. It further benefits by being in the semiconductor group, which itself is breaking out to fresh multi-year highs. Studies have shown that group action is a very big portion of an individual stock’s move. Theoretically, if there is enough business for the sector then there is enough for the company, assuming of course that the company is healthy. And if prices are rising and hurdles, i.e. resistance, are being overcome, then there is a good chance the stock is ready for even more gains. Read More

It is no secret that retail investors have been mostly absent from the stock market in recent years. Foreign currency trading made up for some of the slack, but it has been a rough year for retail-oriented trading firms such as FXCM (NYSE: FXCM). FXCM’s revenue is primarily derived from clients using its software to make online currency trades. On Aug. 7 after the close, the firm reported a second-quarter loss and a 30% year-over-year decrease in revenue as the company continued to struggle with low trading volume and low volatility in its markets. But then… Read More

It is no secret that retail investors have been mostly absent from the stock market in recent years. Foreign currency trading made up for some of the slack, but it has been a rough year for retail-oriented trading firms such as FXCM (NYSE: FXCM). FXCM’s revenue is primarily derived from clients using its software to make online currency trades. On Aug. 7 after the close, the firm reported a second-quarter loss and a 30% year-over-year decrease in revenue as the company continued to struggle with low trading volume and low volatility in its markets. But then something remarkable happened. The next day, the stock fell 6.6% at the open, but it spent the rest of the day rising. By the close it pared the loss to just 1.3%, and a bottom was presumably set. For the next six trading days, FXCM closed in the green as investors piled back in. Such positive action on the heels of bad news is technically bullish. On the chart, we can see the $12.75 level acted as a spring board for the second time in three months, creating a solid… Read More

I can remember when demand for shares of Priceline Group (NASDAQ: PCLN) was so great that it pushed its market capitalization above that of the entire airline industry it served. Those bubble days are long gone, and the stock looks to have a long way to fall before getting its wings again. PCLN has been no slouch over the past year. Exploding out of a trading range in May 2013, it ran from roughly $716 to a high near $1,379 earlier this year. Not too shabby. However, since then, it has been falling more than rising, leaving a… Read More

I can remember when demand for shares of Priceline Group (NASDAQ: PCLN) was so great that it pushed its market capitalization above that of the entire airline industry it served. Those bubble days are long gone, and the stock looks to have a long way to fall before getting its wings again. PCLN has been no slouch over the past year. Exploding out of a trading range in May 2013, it ran from roughly $716 to a high near $1,379 earlier this year. Not too shabby. However, since then, it has been falling more than rising, leaving a failed intra-year recovery in its wake. As we can see in the chart, PCLN peaked in March, along with the broader market. But unlike the major indices, the stock was unable to regain in the summer what it lost in the spring. A failure to reach its prior high is a warning sign, especially when the market was successful in its recovery. Next, cumulative or on-balance volume peaked along with prices in March, and it has been setting lower lows ever since. This indicator keeps a running tab of volume on up days… Read More

As any wealth advisor will suggest, diversification can protect a portfolio from the ups and downs of a volatile market. But with both stocks and bonds trading at high levels and gold languishing, where can an investor turn? The answer is food. We all have to eat, and right now agricultural commodities such as livestock and grains look as if they have found respective bottoms. There are many reasons, both technical and fundamental, why adding a small representation of commodities to a portfolio is a good idea. #-ad_banner-#​From the fundamental side, wheat… Read More

As any wealth advisor will suggest, diversification can protect a portfolio from the ups and downs of a volatile market. But with both stocks and bonds trading at high levels and gold languishing, where can an investor turn? The answer is food. We all have to eat, and right now agricultural commodities such as livestock and grains look as if they have found respective bottoms. There are many reasons, both technical and fundamental, why adding a small representation of commodities to a portfolio is a good idea. #-ad_banner-#​From the fundamental side, wheat prices are reacting positively to the current Russia-Ukraine conflict. These countries are two of the world’s largest exporters of the grain, so supply concerns are front and center. And Kansas City HRW wheat futures have found support at current levels that can be traced back to 2012, if not longer. On the technical side, we’re seeing upside reversals in a number of charts. The iPath DJ-UBS Livestock SubTR ETN (NYSE: COW) scored an upside reversal on Aug. 21, as both of its components — live cattle and… Read More

I keep coming back to biotech stocks, and for good reason — the trends are up and the moves are big. However, with the stock market facing an important crossroads on the charts, I want to sleep at night. Therefore, a biotech ETF is the way to go.  On Thursday,… Read More