With the broader market trading near its all-time highs, I’m on the lookout for catch-up candidates with clearly defined support areas. These stocks tend to offer trades with attractive risk/reward profiles. Shares of fast food restaurant operator Wendy’s (NASDAQ: WEN) are down 2.4% in 2014 compared with a 10.4% gain in the S&P 500. But with earnings out of the way and the stock displaying strength on its weekly and daily charts, WEN looks ripe for a bullish trade. #-ad_banner-#Before the start of trading on Nov. 6, the company reported weaker-than-expected results for its fiscal… Read More

With the broader market trading near its all-time highs, I’m on the lookout for catch-up candidates with clearly defined support areas. These stocks tend to offer trades with attractive risk/reward profiles. Shares of fast food restaurant operator Wendy’s (NASDAQ: WEN) are down 2.4% in 2014 compared with a 10.4% gain in the S&P 500. But with earnings out of the way and the stock displaying strength on its weekly and daily charts, WEN looks ripe for a bullish trade. #-ad_banner-#Before the start of trading on Nov. 6, the company reported weaker-than-expected results for its fiscal third quarter. Adjusted earnings of $0.08 per share were flat year over year and missed expectations by a penny. Revenue declined 20% to $512.5 million, also below analysts’ estimates for $516.7 million. Wendy’s blamed the weak results on a 10-basis-point decline in company-operated margins to 15.5% on higher commodity costs, especially beef prices. Yet, the stock closed 2.4% higher on the day and is up 5.6% since the announcement. Investors were likely cheered by the 2% increase in comparable store sales for the quarter and management reaffirming its full-year outlook. Furthermore, they announced a $30 million cost-cutting initiative. On the… Read More

The past month and a half has certainly been a nutty one for average investors. For many professionals, it’s been one of the most painful times I’ve ever witnessed. Interestingly enough, I think many small investors have outperformed the pros.  Why’s that?  Many large investors who saw the technical damage being done in the major indices in October pared down positions, while private investors by and large stayed in the market. With the violent V-shaped reversal mid-month, those institutional investors that sold down positions into the October lows then had to add stocks to their portfolios again at… Read More

The past month and a half has certainly been a nutty one for average investors. For many professionals, it’s been one of the most painful times I’ve ever witnessed. Interestingly enough, I think many small investors have outperformed the pros.  Why’s that?  Many large investors who saw the technical damage being done in the major indices in October pared down positions, while private investors by and large stayed in the market. With the violent V-shaped reversal mid-month, those institutional investors that sold down positions into the October lows then had to add stocks to their portfolios again at much higher levels. #-ad_banner-#​Hedge funds added to the fun by shorting into the bottom, leading to a nasty short squeeze as the market stampeded higher. While correlation among stocks rises sharply during periods of increased market volatility, the small-cap Russell 2000 is lagging and failed to follow the S&P 500 and Dow Jones Industrial Average to new highs. When looking at those two large-cap indices, it is crucial to keep in mind that the S&P 500 has a large following from a trading perspective and is used as a speculation and hedging vehicle by institutional investors.  In other… Read More

Shares of Monster Beverage (NASDAQ: MNST) soared almost 8% Friday to fresh all-time highs after the company reported better-than-expected earnings. While the stock remains attractively positioned in the longer term from a technical perspective, the daily chart has grown increasingly steep since late August, and Friday’s rally took it vertical. #-ad_banner-#Traders now have a chance to make quick profits on a bearish reversal and classic mean-reversion move lower. On Thursday after the close, Monster reported earnings for the third quarter increased 32% year over year to $0.70 a share, beating estimates for $0.68. Sales… Read More

Shares of Monster Beverage (NASDAQ: MNST) soared almost 8% Friday to fresh all-time highs after the company reported better-than-expected earnings. While the stock remains attractively positioned in the longer term from a technical perspective, the daily chart has grown increasingly steep since late August, and Friday’s rally took it vertical. #-ad_banner-#Traders now have a chance to make quick profits on a bearish reversal and classic mean-reversion move lower. On Thursday after the close, Monster reported earnings for the third quarter increased 32% year over year to $0.70 a share, beating estimates for $0.68. Sales grew 8% from the same quarter a year ago, but revenue of $636 million was below the $642 million estimated by analysts. Following the earnings report, brokerage firm Stifel Nicolaus reiterated its “buy” rating on the stock, raising its price target price to $115 from $110. Credit Suisse (NYSE: CS) also restated its “outperform” rating and bumped its target to $115 from $98.  Their target sits about 7% above current prices, but the charts say traders have a better chance at making profits on the downside here. After an exhaustive run into June 2012, MNST sold off hard… Read More

Shares of online travel company Priceline Group (NASDAQ: PCLN) fell sharply on Tuesday, down 8.4% after the company reported better-than-expected third-quarter revenue and earnings but disappointed investors with its outlook.  Sales jumped 25% year over year in Q3 to $2.84 billion, beating analysts’ estimates for $2.83 billion. Adjusted earnings of $22.16 a share came in 28% higher than a year ago, easily topping expectations of $21.07. #-ad_banner-#​But the stock took a beating on the company’s guidance for the fourth quarter. Management forecasted 11% to 18% top-line growth and earnings of $9.40 to $10.10 a share excluding items. Analysts… Read More

Shares of online travel company Priceline Group (NASDAQ: PCLN) fell sharply on Tuesday, down 8.4% after the company reported better-than-expected third-quarter revenue and earnings but disappointed investors with its outlook.  Sales jumped 25% year over year in Q3 to $2.84 billion, beating analysts’ estimates for $2.83 billion. Adjusted earnings of $22.16 a share came in 28% higher than a year ago, easily topping expectations of $21.07. #-ad_banner-#​But the stock took a beating on the company’s guidance for the fourth quarter. Management forecasted 11% to 18% top-line growth and earnings of $9.40 to $10.10 a share excluding items. Analysts were expecting a much more robust 24% revenue increase and a $10.91 per-share profit. Priceline blamed the deterioration in European exchange rates, which it said is “indicative of weakening economic conditions in key markets.” On the charts, PCLN reversed down exactly where it should have from a technical perspective, and it now looks set to continue lower. Tuesday’s gap down puts the wind at short sellers’ backs, and further selling should provide quick profits. Because of the sharp rally in 2013, I am using a weekly logarithmic chart to smooth out the price action over the years. Looking at the… Read More

Social media giant Twitter (NYSE: TWTR) cratered 10% Tuesday despite reporting that revenue more than doubled in the third quarter. Investors were much more concerned with its slowing user growth. TWTR is a stock that respects its technical parameters, making it ideal for swing traders. Now that earnings are in, there looks to be an opportunity to make quick profits on the short side.  #-ad_banner-#Revenue of $361 million for the quarter beat analysts’ estimates for $351.5 million. Adjusted earnings per share of $0.01 met expectations, and the company raised its guidance for the full year. But all investors seemed to… Read More

Social media giant Twitter (NYSE: TWTR) cratered 10% Tuesday despite reporting that revenue more than doubled in the third quarter. Investors were much more concerned with its slowing user growth. TWTR is a stock that respects its technical parameters, making it ideal for swing traders. Now that earnings are in, there looks to be an opportunity to make quick profits on the short side.  #-ad_banner-#Revenue of $361 million for the quarter beat analysts’ estimates for $351.5 million. Adjusted earnings per share of $0.01 met expectations, and the company raised its guidance for the full year. But all investors seemed to focus on was user growth. The company added 13 million monthly active users in the quarter, bringing the total to 284 million. This represented a 4.8% year-over-year increase, but was slower than the 6.3% growth seen in the second quarter. Twitter’s most direct competitor, Facebook (NASDAQ: FB), also got punished this week after reporting better-than-expected revenue and earnings but issuing a disappointing outlook. The fact that both social media stocks gapped down after earnings is noteworthy and portends more weakness in the group.  I don’t advise trading high-momentum stocks like Twitter or Facebook ahead of earnings precisely because of such gaps. Read More

Shares of car rental company Hertz Global Holdings (NYSE: HTZ) have plummeted nearly 40% since mid-August, erasing a nine-month rally in less than two months’ time. The selling began in force after the company withdrew its full-year financial guidance, blaming a shortage of cars due to recalls and costs associated with an accounting error. Analysts have since lowered their earnings estimates, and the losses have been… Read More

Shares of car rental company Hertz Global Holdings (NYSE: HTZ) have plummeted nearly 40% since mid-August, erasing a nine-month rally in less than two months’ time. The selling began in force after the company withdrew its full-year financial guidance, blaming a shortage of cars due to recalls and costs associated with an accounting error. Analysts have since lowered their earnings estimates, and the losses have been exacerbated by broad market weakness. But for traders, now is the time to look for seller exhaustion, as they could make quick gains by hopping on a bullish reversal. #-ad_banner-#​Activist investor Carl Icahn is Hertz’s largest shareholder, with an 8.5% stake in the company. That alone could be a reason to be interested in playing the long side, particularly at these depressed… Read More

When technology giant Apple (NASDAQ: AAPL) unveils a new product, it’s not only its shares that see movement.  #-ad_banner-#The news often has a chain reaction, causing a nice pop in the stocks of companies whose revenue and profits are likely to get a boost from the latest device. And while AAPL often offers good trading opportunities, from a risk/reward standpoint, better opportunities can often be found in these stocks. Case in point, shares of electronics retailer Best Buy (NYSE: BBY) rallied 3.5% Friday on strong volume, following the reveal of the iPhone 6 and news that Apple had seen a… Read More

When technology giant Apple (NASDAQ: AAPL) unveils a new product, it’s not only its shares that see movement.  #-ad_banner-#The news often has a chain reaction, causing a nice pop in the stocks of companies whose revenue and profits are likely to get a boost from the latest device. And while AAPL often offers good trading opportunities, from a risk/reward standpoint, better opportunities can often be found in these stocks. Case in point, shares of electronics retailer Best Buy (NYSE: BBY) rallied 3.5% Friday on strong volume, following the reveal of the iPhone 6 and news that Apple had seen a record number of preorder sales. The move broke the stock decisively past a resistance line stretching back to early July. BBY now looks poised to fill the big down gap from January, offering traders a juicy bullish setup.  Looking at the weekly logarithmic chart, note that since the top in 2006, there have been two massive V-shaped reversals. Each provided traders the chance to make double-digit profits in a matter of weeks. When the stock broke below its 2008 lows in late 2012, it became very volatile, which was a sign to watch for a potential bullish reversal. Read More

One way to put less money at risk to play Apple (Nasdaq: AAPL) is via its suppliers. When deciding which one, traders need to be selective and choose one with a decent positive correlation to Apple’s stock price.#-ad_banner-# iPhone chip supplier Skyworks Solutions (Nasdaq: SWKS) is one such stock and my pick for playing Apple with more leverage. The stock has a beta of 1.46 versus the S&P… Read More

One way to put less money at risk to play Apple (Nasdaq: AAPL) is via its suppliers. When deciding which one, traders need to be selective and choose one with a decent positive correlation to Apple’s stock price.#-ad_banner-# iPhone chip supplier Skyworks Solutions (Nasdaq: SWKS) is one such stock and my pick for playing Apple with more leverage. The stock has a beta of 1.46 versus the S&P 500, whereas Apple more or less is the market with a beta closer to 0.93. On the charts, the stock looks eerily similar to Apple and has reached or breached several key Fibonacci retracement levels that currently offer good risk/reward for a short-side trade for a 12% gain. A simple look at the correlation between Skyworks (yellow line) and Apple (blue line) pretty much sums up all we need to know. Read More

If we take a step back and look at where stocks are in the bigger picture, there is plenty of reason to believe the broader market should be taking a breather soon before pushing higher in the context of this longer-term secular bull market. More than five years after the 2009 bottom, through a cyclical lens, stocks are getting a little long in the tooth. And considering the potential seasonal headwinds in September and October, this could be an opportune time for the market to pause. However, price action thus far continues to defy any cyclical… Read More

If we take a step back and look at where stocks are in the bigger picture, there is plenty of reason to believe the broader market should be taking a breather soon before pushing higher in the context of this longer-term secular bull market. More than five years after the 2009 bottom, through a cyclical lens, stocks are getting a little long in the tooth. And considering the potential seasonal headwinds in September and October, this could be an opportune time for the market to pause. However, price action thus far continues to defy any cyclical or seasonal headwinds, and fighting this trend has been an expensive battle for the bears. #-ad_banner-#​While the broader market is higher for 2014, I am finding an increasing number of stocks that spent the better part of the year simply consolidating their 2012-2013 rallies that look ready to push higher. Athletic footwear and apparel extraordinaire Nike (NYSE: NKE) is among that group. The blue-chip stock is flat in terms of performance so far this year. However, NKE did see its fair share of price movement over the past eight… Read More

Shares of CME Group (NASDAQ: CME) bounced nicely in recent days as the financial sector continues to support the broader market’s rally. This operator of derivatives and futures exchanges has offered up a number of high-probability trade setups over the past 18 months, and if financials can hold their recent bid, then another chance at short-term profits looks to be on the horizon. Whenever I see a trade setting up in a financial stock, I feel compelled to reiterate the sector’s importance to the tone and strength of the overall stock market. Not only is it one of the largest… Read More

Shares of CME Group (NASDAQ: CME) bounced nicely in recent days as the financial sector continues to support the broader market’s rally. This operator of derivatives and futures exchanges has offered up a number of high-probability trade setups over the past 18 months, and if financials can hold their recent bid, then another chance at short-term profits looks to be on the horizon. Whenever I see a trade setting up in a financial stock, I feel compelled to reiterate the sector’s importance to the tone and strength of the overall stock market. Not only is it one of the largest industries in the United States, but it is intertwined with just about all other industries. #-ad_banner-#Of particular interest from an investing and trading perspective is watching the large bank stocks, which often act as a leading indicator for the broader market. This makes sense considering bankers’ insight into business activities, which in turn, causes them to either expand or rein in lending. In addition to banks, it is helpful to watch insurance companies, brokers and exchange operators such as CME Group for signs of relative strength or weakness. In that vein, the following chart… Read More