Fibozachi Forecast: Week of March 29th

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-    Fibozachi & Chopshop

*** Click here for additional information about the Fibozachi Forecast and for an explanation on how to use "Daily Confirmations"

Short Trade Candidates

CTAS: CINTAS (Short-Term to Long-Term)

Current Price:  27.92
Candlestick Patterns:  Shooting Star, Bearish Harami, Gravestone Doji

CTAS was one of our longs back on 2/19/10 with an entry of 25.54 and a target of 27.40.  The rally was stronger than we anticipated and CTAS carried up to 28.67 last week.  The end of the week saw the bullish momentum dissipate, which brought the closing price to within pennies of the week’s open.

Entry:  Immediate (with daily confirmation) or with a move below 27.86
Target (Short-Term):  26.00 - 27.00
Target (Long-Term):  21.00 - 23.00
Stop-Loss:  28.70 or higher
Potential Risk:  $0.84
Potential Reward (Short-Term):  $0.86 - $1.86
Potential Reward (Long-Term):  $4.86 - $6.86
Risk: Reward Ratio:  1: 2.2  &  1: 8.2

CLX: CLOROX (Short-Term to Long-Term)

Current Price:  64.56
Candlestick Patterns:  Doji, Filled White Candle

CLX has come into prior resistance at the 65 level after rallying for the last 6 consecutive weeks on increasing volume … until last week.  A filled white candle and a Doji registered, while CLX moved even higher on almost half of the volume.  This is a nice trade setup with a great risk/reward ratio due to the tight stop.  If CLX trades above 65.18, we can just leave it alone and forget about it … if it breaks below 64.13, we can get in early with a razor tight Stop-Loss.

Entry:  Immediate (with daily confirmation) or with a move below 64.13
Target (Short-Term):  62.00
Target (Long-Term):  59.00
Stop-Loss:  65.18 or higher
Potential Risk:  $1.05
Potential Reward (Short-Term):  $2.13
Potential Reward (Long-Term):  $5.13
Risk: Reward Ratio:  1: 2  &  1: 4.9

AET: AETNA (Short-Term to Long-Term)

Current Price:  34.32
Candlestick Patterns:  None

After a 5-week decline followed by a 5-week rally, AET registered a very narrow range on minor weakness just above the 35 level.  This level has provided resistance on multiple occasions, so we are looking for a quick drop back to towards the 31 level, with a possibility of additional weakness down to 28.

Entry:  Immediate (with daily confirmation) or with a move below 33.91
Target (Short-Term):  31.44
Target (Long-Term):  28.00
Stop-Loss:  35.32 or higher
Potential Risk:  $1.41
Potential Reward (Short-Term):  $2.47
Potential Reward (Long-Term):  $5.91
Risk: Reward Ratio:  1: 1.8  &  1: 4.2

CRM: SALESFORCE.COM (Short-Term to Intermediate-Term)

Current Price:  74.95
Candlestick Patterns:  Shooting Star, Gravestone Doji

CRM is now up into strong resistance surrounding the 75 level, precisely where it has failed to move higher on the last two attempts back in January 2010 and 2008.  A picture-perfect shooting star candlestick pattern has now registered after a 6-week rally, heightening the chances that CRM will fail to breakout (for the third time) with a strong close above 75 - 78.

Entry:  Immediate (with daily confirmation) or with a move below 74.59
Target (Short-Term):  66.00
Target (Long-Term):  60.30
Stop-Loss:  78.22 or higher
Potential Risk:  $3.63
Potential Reward (Short-Term):  $8.59
Potential Reward (Long-Term):  $14.29
Risk: Reward Ratio:  1: 2.4  &  1: 3.9

DOV: DOVER (Short-Term to Intermediate-Term)

Current Price:  46.07
Candlestick Patterns:  Tweezer Top, Doji

Dover has been stuck in a tight range over the last 4 weeks, which has created a nice, clear trade setup.  We will be looking for a moderate down move to previous levels of support from 40-43.  

Entry:  Immediate (with daily confirmation) or with a move below 45.54
Target (Short-Term):  43.00
Target (Long-Term):  40.50
Stop-Loss:  47.68
Potential Risk:  $2.14
Potential Reward (Short-Term):  $2.54
Potential Reward (Long-Term):  $5.04
Risk: Reward Ratio:  1: 1.2  &  1: 2.4

LSTR: LANDSTAR SYSTEM (Short-Term to Long-Term)

Current Price:  41.40
Candlestick Patterns:  Shooting Star, Doji

LSTR has not really participated in the market rally of the past year … it has simply drifted slightly higher within a long-term consolidation phase.  Early last week saw some strength; however, it was all gone by Friday’s close. Sitting just below major resistance at 42-43, LSTR looks like it may be ready to continue its sideways dance … which means some reversion back down into the choppy trading range that it has been stuck in for the past year. 

Entry:  Immediate (with daily confirmation) or with a move below 41.14
Target (Short-Term):  39.00
Target (Long-Term):  35.00
Stop-Loss:  42.44
Potential Risk:  $1.30
Potential Reward (Short-Term):  $2.14
Potential Reward (Long-Term):  $6.14
Risk: Reward Ratio:  1: 1.7  &  1: 4.7

MRVL: MARVEL TECHNOLOGY (Short-Term to Long-Term)

Current Price:  20.03
Candlestick Patterns:  Shooting Star, Gravestone Doji

MRVL registered a shooting star candlestick pattern after failing to break out above its prior swing high of 21.76.  Because we are looking for a longer-term trade, the stop-loss here is exceptionally large.  We will watch for sideways movement that breaks to the downside in order to further hone in on the 17 level as an initial downside target.

Entry:  Immediate (with daily confirmation) or with a move below 19.88
Target (Short-Term):  17.25
Target (Long-Term):  14.86 – 13.36
Stop-Loss:  21.78
Potential Risk:  $1.90
Potential Reward (Short-Term):  $2.63
Potential Reward (Long-Term):  $5.02 – $6.52
Risk: Reward Ratio:  1: 1.4  &  1: 3.4

R: RYDER SYSTEM (Short-Term to Long-Term)

Current Price:  38.56
Candlestick Patterns:  Descending Hawk

As soon as 2010 hit, Ryder was obliterated over 6 consecutive weeks of relentless selling.  Since then, it has retraced roughly 61.8% of this spill over 6 consecutive weeks of non-stop buying … great volatility and great trending.  Last week registered an extremely narrow range of just 90 cents, which is the tightest (smallest) weekly range in several years.  This offers us a great chance to immediately catch a big down move or be quickly stopped out with a small loss.  Either way, the timing seems just right.

Entry:  Immediate (with daily confirmation) or with a move below 38.16
Target (Short-Term):  35.91
Target (Long-Term):   31.86
Stop-Loss:  39.42
Potential Risk:  $1.26
Potential Reward (Short-Term):  $2.25
Potential Reward (Long-Term):  $6.30
Risk: Reward Ratio:  1: 1.8  &  1: 5

MYL: MYLAN (Short-Term to Long-Term)

Current Price:  22.38
Candlestick Patterns:  None

Mylan has outperformed almost all other stocks over the past 6 weeks with a monster move of over 33%.  We are looking to play a reversal to the downside, with very clear-cut targets of 19.21 and 16.75.  Our tight stop-loss and profit targets offer us an extremely high risk/reward for the trade.   

Entry:  Immediate (with daily confirmation) or with a move below 21.98
Target (Short-Term):  19.21
Target (Long-Term):  16.75
Stop-Loss:  23.33
Potential Risk:  $1.35
Potential Reward (Short-Term):  $2.77
Potential Reward (Long-Term):  $5.23
Risk: Reward Ratio: 1: 2.1  &  1: 3.9

Long Trade Candidates

DNR: Denbury Resources (Short-Term)

Current Price:  15.60
Candlestick Patterns:  None

DNR showed strength last week, closing strongly with a hold above the 15.00 level.  While a cluster of targets exist overhead, our focus is on an upside move towards 16.50-17.50.  Although DNR (historically) likes to chop around sideways before breaking out with quick thrusts in price action and normally requires a bit of patience, this setup should work from the get-go.  Either way, so long as the trade isn’t voided before entry, a stop below 15.00 ought to do the trick.

Entry:  Immediate (with daily confirmation) or with a move above 15.75
Target (Short-Term):  16.60 – 17.50
Target (Long-Term):  18.84
Stop-Loss:  14.97
Potential Risk:  $0.78
Potential Reward (Short-Term):  $0.85 - $1.75
Potential Reward (Long-Term):  $3.09
Risk: Reward Ratio:  1 : 2.2  &  1: 4

XRX: Xerox (Short-Term)

Current Price:  9.70
Candlestick Patterns:  None

Xerox has recently managed to grab another swing high over the last few weeks, continuing a series of higher highs and higher lows.  Its chart appears to be less “toppy” than the vast majority of other individual issues and, if it can breakout over 10.17, retains the possibility to continue its drift higher.

Entry:  Immediate (with daily confirmation) or with a move above 10.17
Target (Short-Term):  11.53
Target (Long-Term):  12.30
Stop-Loss:  9.34 or lower
Potential Risk:  $0.83
Potential Reward (Short-Term):  $1.36
Potential Reward (Long-Term):  $2.13
Risk: Reward Ratio:  1: 1.6  &  1: 2.6

FXI: iShares FTSE/Xinhua China 25 Index (Short-Term - Intermediate-Term)

Current Price:  40.83
Candlestick Patterns:  Two Hollow Reds

While the longer-term outlook is rather unappealing, we think that FXI can move higher over the next few weeks.  The past two weeks have registered red hollow candles, signifying that bullish momentum remains present … buying strength appears poised to overcome sellers for a few weeks.  Again, while we’re not thrilled with FXI’s long-term outlook, its internal and relative strength remains buoyant.

Entry:  Immediate (with daily confirmation) or with a move above 41.74
Target (Short-Term):  44.33
Target (Long-Term):  46.66
Stop-Loss:  39.89 or lower
Potential Risk:  $1.85
Potential Reward (Short-Term):  $2.59
Potential Reward (Long-Term):  $4.92
Risk: Reward Ratio:  1: 1.4  &  1: 2.7

Disclosure: no position in the securities mentioned at the time of publication.  During any given session, we may trade any instrument bi-directionally.