Fibozachi - Superior Trading Indicators
Fibozachi - Superior Trading Indicators

Fibozachi - Superior Trading Indicators

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Short Trade Candidates

 

WYNN: Wynn Resorts (Short-Term to Intermediate-Term)

 

Current Price83.82

Candlestick PatternsNone (almost Dark Cloud Cover)

 

WYNN rallied nearly 50% over just 7 weeks before registering a key reversal bar last week that may lead to increased selling pressure over the next 2-6 weeks.  As a component of the Casino and Gambling sector, WYNN sports exceptional volatility that can lead to very strong price moves with minimal consolidation.  While the 78.00 level should provide some support, it is likely that WYNN will eventually fall into the 70.00 - 75.00 support zone.

 

EntryImmediate (with daily confirmation) or with a move below 82.90

Target (Short-Term)75.00

Target (Long-Term)70.25

Stop-Loss87.50 or higher

Potential Risk:  $4.60

Potential Reward (Short-Term)$7.90

Potential Reward (Long-Term)$12.65

Reward: Risk Ratio1.7  &  2.8

 

WYNN

 



WFR: MEMC Electronic Materials (Short-Term to Long-Term)

 

Current Price16.25

Candlestick PatternsShooting Star

 

Another 7-week rally may have ended last week, as WFR registered a shooting star candlestick pattern while filling a gap that was created back in October '09.  It is likely that the 17.00 level will provide formidable resistance that sends price back towards 14.00 - 15.20 over the next 2-4 weeks.  Extended weakness would test the recent double bottom surrounding the 11.50 - 12.00 levels, which offers a great reward: risk ratio over the long-term.

 

EntryImmediate (with daily confirmation) or with a move below 15.98

Target (Short-Term)14.00

Target (Long-Term)12.00

Stop-Loss17.05 or higher

Potential Risk$1.07

Potential Reward (Short-Term)$1.98

Potential Reward (Long-Term)$3.98

Reward: Risk Ratio1.9  &  3.7

 

WFR

 


 

LTD: Limited Brands (Intermediate-Term to Long-Term)

 

Current Price27.07

Candlestick PatternsNone (almost a Shooting Star)

 

All rallies must eventually come to an end and, after closing higher for 12 consecutive weeks, LTD's price action appears to be nearing inflection.  The long upper shadow on the weekly candle indicates that bullish momentum may finally have exhausted itself, after more than a 60% gain over the last 3 months.  LTD has now come into prior resistance at 28.00 - 29.00, which significantly decreases the chance of a continued move higher.  This is a good example of "selling into strength" or "feeding the ducks when they're quacking."

 

EntryImmediate (with daily confirmation) or with a move below 26.56

Target (Short-Term):  24.00

Target (Long-Term):  21.16

Stop-Loss28.06 or higher

Potential Risk:  $1.50

Potential Reward (Short-Term):  $2.56

Potential Reward (Long-Term)$5.40

Reward: Risk Ratio1.7  &  3.6

 

LTD

  


  

HOT: Starwood Hotels (Short-Term to Long-Term)

 

Current Price48.29

Candlestick PatternsNone (almost a Bearish Harami)

 

Prior to last week's key reversal bar that halted upward momentum, HOT enjoyed a 10-week rally that carried shares roughly 50% higher.  While last week's candle would have been a Bearish Harami candlestick pattern if it's high had not exceeded that of last week (we only use strict formulas), the underlying concept and character of price action remain similar.  HOT actually managed to close each week at, or very close to, it's weekly high ... this indicates that it performed very well during all end-of-week Friday sessions.  Last week witnessed the opposite, with shares dropping on Friday to close the session just 17 cents above the weekly low.  From here out, we will be looking for continued weakness and for the 50.00 level to continually appear further and further away from HOT's rearview mirror.

 

EntryImmediate (with daily confirmation) or with a move below 48.12

Target (Short-Term) 43.00

Target (Long-Term):  37.00

Stop-Loss50.63 or higher

Potential Risk $2.51

Potential Reward (Short-Term):  $5.12

Potential Reward (Long-Term)$11.12

Reward: Risk Ratio2  &  4.4

 

HOT

  


  

CLF: Cliffs Natural Resources (Intermediate-Term to Long-Term)

 

Current Price70.24

Candlestick PatternsBearish Engulfing & Tweezer Top

 

After last week's strong sell-off Bearish Engulfing and Tweezer Top patterns registered on CLF, which may be the beginning of an upcoming drop in shares over the next 4-10 weeks.  The main reason we do not normally establish positions after most Bearish Engulfing patterns is because it forces one to use a larger stop-loss than usual.  However, we are making an exception here for CLF because of how much "free space" it has to fall (no prior swing highs above 55.40 to provide support).  This enables us to still pre-define a solid reward: risk ratio based on given entry, stop-loss, and profit targets.  CLF also sports a higher beta than most issues, so an appetizer of volatility could be immediately followed by forceful price action. 

 

EntryImmediate (with daily confirmation) or with a move below 69.77

Target (Long-Term):  55.40

Stop-Loss76.18 or higher

Potential Risk:  $6.41

Potential Reward (Long-Term):  $14.37

Reward: Risk Ratio2.2

 

CLF

 


 

Long Trade Candidates

 

VRTX: Vertex Pharmaceuticals (Short-Term to Intermediate-Term)

 

Current Price: 39.99

Candlestick PatternsNone

 

Vertex has trended both up and down in almost picture-perfect fashion since November '09, allowing for some fantastic swing trade setups that have consistently worked.  Interestingly, VRTX has done the exact opposite of the markets (and most stocks) over the last 5 weeks; selling-off for 4 consecutive weeks with a bullish key reversal to the upside after last week's strong close.  If VRTX holds here, it will continue a series of higher highs since gapping up during the first week of November.  However, be aware that this is much too big of a gap to remain unfilled ... price will eventually close it over the long-term.  If the clean trending continues, we expect VRTX to rally up and fail at the 44.00 again before finally rolling over.

 

EntryImmediate (with daily confirmation) or with a move above 40.22                                  

Target (Short-Term) 44.00

Stop-Loss38.21 or lower

Potential Risk:  $2.01            

Potential Reward (Short-Term)$3.78

Reward: Risk Ratio1.9

 

VRTX

  


  

SPWRA: SunPower (Short-Term - Intermediate-Term)

 

Current Price18.29

Candlestick PatternsNone (almost a Doji)

 

SunPower, like most energy stocks, has not rallied with the rest of the markets over the past 6 months.  Instead, it has dropped nearly 50% from its October '09 swing high of 33.97 (which failed 3 cents below the 7/31/09 swing high of 34.00).  After 4 consecutive weeks of narrow-range consolidation, the obvious play here is to watch for a constructive 2-3 pattern to bring about a retracement bounce back up into 20.00 - 22.00.  A body-to-body (rather than wick-to-wick) trendline has now had 3 touches/ failures, so a break of this trendline to the upside should result in a small rally that can produce some nice trading gains.  Since last week's low of 17.93 held above the 2/26/10 low of 17.82, price action this week will be especially important to note; either a blatant FNL (failed new low) is plotting, which will give us a perfect level for our stop-loss or SPWRA will simply continue to coil lower into the mid 17's in the days ahead.

 

EntryImmediate (with daily confirmation) or with a move above 18.72                                                                                      

Target (Short-Term): 20.00

Target (Long-Term): 22.19

Stop-Loss17.81 or lower

Potential Risk:  $0.91                                              

Potential Reward (Short-Term)$1.28

Potential Reward (Long-Term)$3.47

Risk: Reward Ratio1.4  &  3.8

 

https://www.fibozachi.com/images/stories/FibozachiForecast/4-18-10/SPWRA.png

 


  

OREX: Orexigen Therapeutics (Short-Term to Intermediate-Term)

 

Current Price5.65

Candlestick PatternsDoji & High Wave

 

Though OREX is not a very well-known stock, it meets the volume and market cap requirements of our scan filters and it's current technical profile is very intriguing from a bullish perspective.  Last week's wide-range doji registered on 200% - 300% of average weekly volume (2-3 million shares), while also filling a long-standing gap that was created back on 7/24/09.  And although price action within OREX exhibits a tendency to drift sideways, it also tends to provide double-digit percentage movement every 3-4 weeks.  While a firm upside target would be 7.00, the process of getting there may be somewhat sluggish.  OREX must first penetrate downward sloping trendlines of resistance that traverse round number 6 before a clean bull move towards 7 takes place.

 

EntryImmediate (with daily confirmation) or with a move above 5.87

Target (Short-Term):  7.00

Stop-Loss5.38 or lower (trade is only voided if price drops below 4.94)

Potential Risk:  $0.49

Potential Reward (Short-Term):  $1.13

Reward: Risk Ratio2.3

 

OREX

 


  

BGZ: Large Cap Bear 3x (Short-Term to Long-Term)

 

Current Price13.05

Candlestick PatternsDoji

 

Another inverse ETF for those without the ability to short, BGZ is actually offering better entry and stop-loss levels than most non-leveraged ETFs such as SPY.  BGZ managed to close last week at 13.05, the exact closing price of the prior week as well ('matching closes').  While last week's doji candle closed just 4 cents above the open, it illustrated a diminishing amount of bearish pressure.  After 8 weeks of a sell-off that almost cut BGZ shares in half, this trade setup offers a fantastic reward: risk ratio (leveraged ETFs often do when correctly employed for 'short' periods of time) that greatly surpasses what could be achieved using similar ETFs due to explicitly pre-defined risk.

 

EntryImmediate (with daily confirmation) or with a move above 13.25

Target (Short-Term):  15.44

Target (Long-Term):  20.28

Stop-Loss12.37 or lower

Potential Risk:  $0.88

Potential Reward (Short-Term):  $2.19

Potential Reward (Long-Term):  $7.03

Reward: Risk Ratio2.5  &  8

 

BGZ

 


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



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