Caterpillar (CAT) – 01-27-2010
Caterpillar’s outlook basically follows the general economic outlook. When people think the future looks good and there will be lots of growth, CAT goes up. When there is a pessimistic view, CAT goes down. But the reason I’m looking at it today is obvious. A clean break of support with good volume is always something to keep an eye on. The hammer (bullish reversal) candlestick pattern isn’t so good for bears though.
Since CAT seems to be leading the bearish trend of the S&P 500, it looks like a decent short for a general market downturn. If the market hangs around in distribution, this might be a good range bound play. And if the market turns bullish, I’d probably ignore this since there are other better options I could consider right now.
Harbin Electric (HRBN) – 10-06-2009
I remember looking at HRBN a couple years ago when it was around $20. Since then it hit $28, dropped down to $4.25, and bounced back to almost $20 again. A nice little breakout today bumps this one back up towards the top of my watchlist. With tremendous upside and downside potential, this one is still interesting for the active trader who’s disciplined.
Green Mountain Coffee (GMCR) – 09-30-2009
GMCR has been a super hot topic amongst people talking growth stocks for a while now. They also had a breakout that’s been holding up over the past few days, but the volume gives a conflicting signal. I believe this stock is getting overbought and will eat it hard on the correction. Normally I like to play stocks like this with triggers on both sides, playing the upwards momentum on short term trades of the breakouts, but trying to catch the crash after it starts. Note that the key to this strategy is catching the crash AFTER it starts since you will get eaten alive trying to trade against momentum this strong. With the volume dwindling the way it has on this one, I’m guessing the crash is close enough to start paying attention though.
Research in Motion (RIMM) – 09-25-2009
RIMM has been under attack from AAPL, GOOG, MSFT, and PALM in the smartphone market and it’s finally starting to show in their numbers. Their days of complete domination appear to be over, so now they need to come up with a way to keep their current user base or expand the market. Fortunately for them, the market is rapidly expanding, but they can’t afford to rest on their laurels or they’ll end up needing a huge comeback like AAPL in 2000 (completed successfully) or PALM right now (TBD).
The volume of the drop today outpaced the breakout that brought us here, so it will be interesting to see what happens. If the market follows through with its correction, RIMM may be a nice short play. If not, it should at least be interesting to day trade on some bounce back days. Either way, all of these stocks are interesting to watch if you like tech stuff for the long run too.
STEC (STEC) – 06-23-2009
STEC is a hot tech company that makes solid state drives. You definitely want to avoid this if you’re not an active trader, but it looks like it will have some nice swings to the upside and downside in the near future. A fairly strong company by the numbers that carries no debt, the explosion this year was well founded and came at a good time to be amplified by the general bullish market conditions. Increasingly powerful breakouts look like they may lead to a classic bump and run pattern. While a company may stay fundamentally strong during a reversal, sometimes stocks just get too overbought to sustain the momentum.
My play on this one is just to enter it manually as a prescreened stock into my auto trader. If I were manually trading it, I would be waiting for the reversal since we’ve already passed the point that I would feel comfortable trying to swing trade to the upside. Of course a stock this strong should also be put in the watch list for later on as a bullish position to take after a good correction and base.
California Pizza Kitchen (CPKI) – 04-29-2009
Restaurants like CPKI, BJRI, and CAKE have all been on an absolute tear lately. PNRA just got killed after hours for merely meeting expectations today, so I think the sector is showing that its hopes are a little too inflated. If there is a market correction these will all be solid stocks to watch for short opportunities.
Triggers
- Above $17 – note the 52 week breakout and consider playing if there’s a lot of consolidation between now and then (and the economy is better)
- Below $14 – short