By Roberto Pedone
WINDERMERE, Fla. (
can be a great asset to investors who want to determine what the trend of the market or a stock is before they throw down hard-earned money. Consulting the charts can help you spot important market action before it happens, preparing you to follow the trend and make the right trade.
Technical analysis is a method of evaluating securities by relying on the assumption that market data, such as charts of price and volume, can help to predict future market moves and trends. Technical analysis will help guide you to discovering the chart patterns that offer the highest probability of success. By consulting the charts and using technical analysis, plus combining those methods with fundamental analysis, you will truly have an edge over a majority of market participants.
Right now, the
has made a significant technical move by breaking above its 200-day moving average of 1114.83. A move above the next area of major resistance at around 1131.23 could set up a run back toward 1173. Market players should expect new money to flow into the markets as long as the S&P can stay above both its 50-day and 200-day moving averages. Many large institutional investors will not deploy money into the markets unless the S&P is trading above both of these key levels.
Recently, the tech-heavy
has also made a significant technical move by trading above its 200-day moving average of 2264.71. Market players should watch for this key index to take out the next area of significant resistance at around 2307.60. A move above that level should set up a run back towards 2341, which is the next area of overhead resistance.
Here's a look at
that are piquing the interest of the Stockpickr community.
Stockpickr member moglie submitted
, a biopharmaceutical company that discovers, develops and commercializes therapeutics.
Recently, the stock saw an influx of very heavy volume that was well over the average daily action. On July 27, more than 46 million shares changed hands as the stock closed higher, compared with the three-month average daily volume of around 14.6 million shares. This action is extremely bullish, especially when you consider that since that big-volume day; the stock has been making lower highs and uptrending in price.
If you're bullish on this name, you're going to want to see the stock trade back above the 50-day moving average of $34.71 on decent volume. If the stock can manage to move back above that level in the short term, then it should set up the stock to test some previous overhead resistance at around $35.50 and $37 a share. A move above those levels should send the stock back toward $40 a share.
I think the probability of this happening is high when you consider the bullish volume trends and higher lows the stock is making in the short term. However, let the stock confirm its strength by taking out any overhead resistance with ease.
More on Gilead
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Stockpickr member kjp712 submitted
China Precision Steel
, a steel processing company principally engaged in the manufacture and sale of high precision cold-rolled steel products and in the provision of heat treatment and cutting of medium and high carbon hot-rolled steel strips.
This is a speculative small-cap stock based in China that definitely isn't for the faint of heart. China Precision Steel is displaying a number of very bullish technical trends that could lead to much higher prices in the near future. For instance, the stock has been uptrending nicely since it put a short-term bottom in back in July at around $1.26 a share. Since that bottom, the stock has been making higher lows and has broken back above the 50-day moving average of $1.51. Now the stock is forming a consolidating pattern, and the next move out of this tight range will indicate the overall trend.
If you're bullish on this name, look for this stock to take out some overhead resistance at $1.64 and $1.70 a share. A move above those levels on strong volume should indicate that none of the resistance between current levels and the 200-day moving average of $2.01 should pose any problem.
Stockpickr member Michael Morse submitted
, which is engaged in operating restaurant chains.
Unfortunately, I can't say that I see much to like or be bullish about with this stock. Recently, Denny's has failed to trade back above its 50-day moving average of $2.70, which isn't the greatest sign if you're a bull. Also, Denny's is trading below its 200-day moving average, which is another reason it's hard to be a bull on this stock.
Another problem with Denny's is that the stock has now started to drop below a near-term trend line that was acting as support for the stock. If the stock can't manage to get back above this trend line, it could mean shares of Denny's are setting up to retest support all the way down toward $2.33.
If you're bullish on this stock, I would wait for the shares to prove to you that they're in strong hands and not weak ones. One way to confirm this is by the stock making a move back above a longer-term downtrend line that I added to the chart. Look for Denny's to trade above around $3 a share to confirm that the bulls have taken back control of the stock.
The final chart comes from Stockpickr member xxfranky1769xx, who submitted
People's United Financial
, a savings-and-loan holding company that specializes in commercial banking, retail and small business banking, and wealth management services.
You can see on the chart for People's Bank that recently the stock has run into some tough resistance at around $14.20 a share and failed to trade above that level. Even worse is that the stock has now started to trend lower and drop below the 50-day moving average of $13.84. This is troubling because the stock is starting to trade in a counter-trend direction vs. the overall market, which has been reasonably strong of late.
It now looks like People's is setting up to retest some lower-level support at around $13.30 to $13.12 a share. If the stock breaks below $13.12, it could mean that shares are setting up to resume the nasty downtrend that started back in May. I just can't see any reason from a technical standpoint at this time to play with this stock on the long side.
To see some more technical analysis on stocks like
Wolverine World Wide
, check out the
portfolio on Stockpickr.
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