Trading on Trend Lines, Not Headlines

Everyone has his or her own reason for trading. That's what makes the market so fascinating. A collective group of individuals, each with the power of independent thought (yet with a tendency toward herd mentality), push and pull on the same securities for different reasons.

People interpret news differently. Rarely is a significant market move attributable to a single news event. It happens -- and will likely happen as the war grinds to a conclusion. But don't count on being able to capitalize on the news for consistent profitability. Instead, use squiggly lines.

Today's charts include Linens 'n Things (LIN - commentary - Cramer's Take), Argosy Gaming (AGY - commentary - Cramer's Take), Beckman Coulter (BEC - commentary - Cramer's Take), Unocal (UCL - commentary - Cramer's Take) and Aetna (AET - commentary - Cramer's Take).

Linens 'n Things

Linens 'n Things looks like a good short. Yes, it's at the bottom of its trend channel, which might lead to a bounce. If such a bounce occurs, then the prudent bear would wait for a better opportunity to short at higher prices. However, I think yesterday's close below a psychologically important $20 level could lead to further declines, especially if the broader market is weak.

Argosy Gaming

There's no fooling around with Argosy Gaming. This stock had a heck of a run in March, but it got its comeuppance on April Fool's Day. Resistance is at $20, and Argosy needs some rest before pushing higher. I'd look for a pullback to around $17.50, with a stop just above $20. The relative strength index, or RSI, is resolving a 70+ reading by trading lower.

Beckman Coulter

Unlike the rest of the market, Beckman Coulter hasn't been causing shareholders to lose sleep. It's just had a nice, steady uptrend for the past few months. Now, price has finally intersected with the declining 200-day moving average, and the battle is raging. At this point, it looks as if the bulls are going to push Beckman Coulter up above this critical bull-bear boundary line. I'd wait for another close above the 200-day moving average before taking stock. But any decline back into the trading channel (as long as it remains above the middle Bollinger Band) is just another opportunity to buy.

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Dan Fitzpatrick is a freelance writer who trades for his own account. His columns focus on quantitative strategies for trading and investing. Fitzpatrick is a member of the Market Technicians Association and authors The Stock Market Mentor, a newsletter focusing on the proper use of technical analysis for trading and investing. At time of publication, Fitzpatrick held no position in any stocks mentioned, though positions may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Fitzpatrick cannot provide investment advice or recommendations, he welcomes your feedback and invites you to send it to [e-mail].