Technical Setups: BJ's, Endo, Lockheed Martin

These stocks could be staging a technical move.

By Jonas Elmerraji , Mar 9, 2010 1:04 PM EST

By Jonas ElmerrajiBALTIMORE (Stockpickr) -- Stock futures look set to take a pause on Tuesday, following a sizable rally that pushed the S&P 500 from just above 1100 all the way to yesterday's close at 1138.50. That reprieve from gains comes just in time. With a significant resistance level at 1150, the odds of pushing an overbought market even higher look slim. Now that the market appears to be taking a day to regroup, the odds of actually breaking new ground look significantly stronger.

But we're not all that concerned with broad market moves today. Instead, it's time once again to take a technical look at the stocks that are best inclined for a breakout this week.

Technical analysis is a way for investors to quantify qualitative factors such as investor psychology based on a stock's chart patterns and trends. Once the domain of cloistered trading teams on Wall Street, technicals can help top traders make consistently profitable trades and can aid fundamental investors in better planning their stock execution.

But all too often, investors don't know where to start. So every week, Stockpickr takes a look at stocks that could be staging a technical move soon and compiles a portfolio of promising

Technical Setups

Here's a look at this week's stocks.

Defense giant

Lockheed Martin

(LMT) - Get Report

has fared significantly better than the market so far in 2010 -- the stock is up 7.6% since January's first trading day -- and it looks like shares could be headed even higher before March is out.

Lockheed is the largest defense contractor in the world. Last year, the company generated more than $45 billion in revenues thanks to key contracts such as the F-35 jet fighter and a growing focus on the company's IT systems business. Although some have worried that lower defense spending budgets could curb Lockheed's growth, the company has responded by focusing on growing undersaturated business lines that generate recurring revenues. But fundamentals aside, the most compelling thing about Lockheed Martin right now is its chart.

Shares of Lockheed Martin have been forming a bullish "inverse head and shoulders" pattern since last August -- a pattern that the stock is already in the midst of rallying on. Although Lockheed's inverse head and shoulders isn't a textbook "pretty" pattern, it is still a tradable one, and resistance at $85 gives the stock a well defined upside right now for traders who want in on the action.

Things are looking markedly different for

BJ's Wholesale Club

(BJ) - Get Report

. Although BJ's shares are also up on the year, the company has been on a roller coaster ride for some time thanks to a bearish price pattern that was followed up by earnings numbers that pleased Wall Street. Now, following a breakdown in the company's share price, the company's shares could be headed lower.

Competition is fierce in the warehouse club retail space. With league-leaders

Costco

(COST) - Get Report

and Sam's Club (a division of

Wal-Mart

(WMT) - Get Report

) taking up a huge chunk of the nation's market, BJ's, which focuses on the Northeast, will have to differentiate its offerings to get membership revenues. It does that by offering nearly twice the products that Costco carries in its locations. But differentiation won't cure BJ's chart right now.

Shares broke below two key moving averages in yesterday's trading, a move that could prompt an even bigger selloff for the rest of the week. Our short-term price target is $32 right now, giving us a decent intraweek return coupled with limited upside risk.

Pain management specialist

Endo Pharmaceutical Holdings

(ENDP) - Get Report

is about to make a run for higher ground. The stock, which has been rallying incredibly hard in 2010, has made it to just below its $24 resistance level. Now, with March's bullish sentiment in tow, a breakout move is foreseeable for shareholders.

As always, it's wise to wait for a technical buy trigger before considering taking this play. In the case of Endo, wait for a break above $24 followed by two consecutive closes above that blue horizontal line. It's likely that shares will retest support after breaking above it, and you won't want to get caught if that level fails.

To see these plays in action, check out the

Technical Setups for the Week portfolio

on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

>>Cramer's Take on Headline Stocks

>>Rocket Stocks for the Week

>>Technical Analysis Forum

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