BALTIMORE (Stockpickr) -- Yesterday's passing of the financial reform bill in the Senate is likely to steal the market headlines to finish the week, but it's less likely to make a major impact on stocks. The bill, which passed the House last month, immediately cuts off new spending from TARP and creates new agencies tasked with protecting consumers from financial frauds and abuses. It also places to restrictions on derivatives and executive compensation, and a new "kill switch" for the government to carefully dismantle businesses once deemed too big to fail.
But for all of the verbiage in the 2,300-page financial reform bill, few of the changes will actually be felt by retail investors.
Instead of focusing on fundamentals price catalysts that aren't there, let's look to lock in gains with the technicals instead.
uses a stock's price movements to determine where shares are headed in the future. Technical charts are used every day by proprietary trading floors, the Street's biggest financial firms and individual investors to get an edge on the market. And according to some sources, skilled technical traders can bank gains as much as 90% of the time.
at how some of the biggest names on Wall Street are trading technically.
For Danish biopharmaceutical company
, 2010 has been an impressive year; shares are already up more than 39% since January. But more good times could be ahead thanks to a bullish pattern in the company's shares.
Novo has been forming a bullish ascending triangle pattern since late April, but shares broke out yesterday, pushing above resistance at $86 and moving up to a 52-week high of $89.23. That breakout sends a definitive buy signal to traders, who up to now have been waiting and wondering if this latest push higher would clear through resistance or not.
It's quite likely that shares will pull back to retest resistance sometime next week. To minimize your downside risk on this trade, consider placing a stop right below the $86 price level.
That bullish sentiment isn't being shared at competitor
. While Glaxo has made a nice double digit run-up since late May, it's hardly made up for the precipitous decline in share prices over the course of the last six months. And the bearish tilt could be far from over with shares bumping their head on resistance right now.
GlaxoSmithKline's share price is right below its 200-day moving average right now, a level that generally acts as a tough resistance level. While there is certainly potential for GSK to break through the 200-day, there's substantial downside risk right now with support levels far below.
I'd recommend sitting things out on this big league stock, and wait to take a trade on a more promising setup.
Brazilian mining giant
is another stock that's under bearish pressure right now -- only Vale's downside risk isn't just a bearish overtone. It's a potential short-side setup.
Shares of Vale have been trading in a descending triangle pattern for several months now. The descending triangle, which is marked by lower highs and a staunch support level, is a highly predictable downside indicator -- and a push lower by shares could be the sell signal for investors who want to bet against this company.
The key to watch should be July 30 earnings. The company's second-quarter 2010 earnings numbers could prove to be just the catalyst to send shares below support or abort the bearish pattern. Wait until one of those things happens before putting your cash on the line with this stock.
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At the time of publication, author had no positions in stocks mentioned.
Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.