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Big Swing Trade Ideas for Monday, May 12

NEW YORK (TheStreet) -- Good morning traders!

Today's top picks are Meritor (MTOR)Halcon Resources (HK), and Avanir Pharmaceuticals (AVNR).

1. First let's look at Meritor, which designs, develops, manufactures, sells, markets, distributes, services and supports integrated systems, modules and components to original equipment manufacturers and the aftermarket for the commercial vehicle, transportation and industrial sectors.

  • Friday's range: 13.23 - 13.67
  • 52-week range: 6.09 - 14.15
  • Friday's volume: 1,469,602
  • 3-month average volume: 1,314,550

Meritor is looking good at this level, as shares spiked after earnings on May 1. Shares have been consolidating since earnings, then retraced back to the t-line (8 exponential moving average, or 8 EMA).

The chart is forming a bullish flag signal, with a breakout level of about $13.70. Watch for increasing volumes on the breakout. I'd enter this trade on any positive strength. I'd start with a 1/4 position and add to this position above $14 on the confirmed breakout.

This chart also looks like it is setting up for a j-hook pattern, which can be very profitable -- as much as 17% or more.

Meritor is up over 30% since the start of 2014, and shares have more than doubled in the last year. Plus the company keeps reporting strong earnings.

Meritor looks to be holding strong, so get in while the strength is on its side.

Target the top of the current trend channel. I'd set a stop at about $12.75. Stay long until you see a confirmed sell signal or a close below the t-line.

2. Next up is Halcon Resources, an independent energy company. Halcon is engaged in the acquisition, production, exploration and development of onshore oil and natural gas properties in the U.S.

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