1. First, let's look at miner Cliffs Natural Resources.
Cliffs traded positively on Friday, closing up 2.19% at $15.84.
- Friday's range: $15.25-$15.94
- 52-week range: $13.60-$28.98
- Friday's volume: 4,625,010
- Three-month average volume: 5,085,770
Cliffs looks good from a technical standpoint because it is in a confirmed trend reversal to the upside and is trading over the 50-day simple moving average. The trend reversal occurred on June 13, when the chart formed a bullish engulfing signal, followed by another bullish engulfing signal, which is clear confirmation.
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Then the chart traded in a normal uptrend fashion, creating higher highs and higher lows, eventually trading over the 50-day SMA.
Cliffs showed up on my rounded-bottom-breakout scanner on July 3, but failed to confirm the breakout the following week. The chart popped up on the scanner again last Wednesday, but failed to break out on Thursday. And yet, it hasn't failed the current uptrend.
Friday formed a bullish engulfing candlestick, which further confirms the bullish sentiment.
I would like to see continued confirmation on Monday, but would feel comfortable entering this trade on Monday's open.
It will likely open on an inside day, meaning within Friday's trading range. I'd like an entry above the 50-day SMA at $15.49, but I'd enter as low as the 20-day SMA at $15.14.
The uptrend won't fail until closing below $14.45, and so technically one could enter as low as that and still be within the uptrend. With that, I'd set a stop just below $14.45.
As with all rounded-bottom breakouts, I would target the 200-day SMA, which is at $20.44 -- 22% to the upside from Friday's close.
Cliffs is reporting earnings on Thursday after the market close, and so be mindful of that. I don't like to hold over earnings, but do as you wish.
It may be a good idea to set an after-hours stop to secure you profits in the event of after-hours trading to the downside.
2. Now, let's look at MannKind, a biopharmaceutical company focused on developing treatments for cancer and diabetes.
MannKind traded up 5.49% on Friday to close at $9.80.
- Friday's range: $9.25-$9.97
- 52-week range: $3.80-$11.48
- Friday's volume: 8,964,133
- Three-month average volume: 10,061,600
MannKind can get crazy, and so trade it with caution. But it can also be a very lucrative stock to trade. Just look at June 27's candlestick, which had a 36% trading range during the day.
The stock's chart formed a bullish engulfing signal on Friday after trading down to the 50-day SMA. The 50-day SMA has been a great support level for MannKind, and Friday confirmed that. The bullish engulfing signal needs confirmation on Monday, and so watch for strength to the upside on the open.
I'd like to have an entry above the t-line, which is roughly at Friday's close of $9.80. I'd set a tighter stop than usual with MannKind because it is so shifty, though you run the risk of getting stopped out due to intraday volatility.
My stop would be just below the 34-day exponential moving average, which is at $9.66. I would target the 52-week high of $11.48, which is almost 15% to the upside from Friday's close.
There is strong resistance at around $10.70, and so you may want to target this level for taking partial profits.
Stay long until you see a confirmed sell signal, or a confirmed close below the t-line.
3. Lastly, let's look at PolyOne, a supplier of plastics and resins,
The stock traded positive on Friday, closing up 1.62% to $42.03.
- Friday's range: $41.33-$42.31
- 52-week range: $26.04-$43.34
- Friday's volume: 656,768
- Three-month average volume: 848,795
PolyOne is a great looking bull chart. The current uptrend has been going since June 2012.
The chart trades in the typical form, creating higher highs and higher lows, and is great for the swing trader and long-term investor alike.
Friday's candlestick was another bullish engulfing signal. Price action is trading at the low side of the current trend channel, which offers us a better entry price, which is known as a pullback opportunity.
The kicker is that PolyOne is reporting earnings today at the market close. Entering on an earnings day can be risky, but can also be beneficial. Historically, PolyOne's earnings have been good, and usually the company reports positively, which makes the stock price rise.
I'd look for an entry within Friday's trading range of $41.33-$42.31 and set a stop as low as the 50-day SMA, which is at $40.65.
I would target the top of the trend channel, and add to the position on dips to the downside, such as current price.
I'd stay long on this chart until you see a truly compelling sell signal, even as low as $40, because this chart has no signs of stopping the sweet uptrend.
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At the time of publication, the author had no position in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
TheStreet Ratings team rates CLIFFS NATURAL RESOURCES INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CLIFFS NATURAL RESOURCES INC (CLF) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Metals & Mining industry and the overall market on the basis of return on equity, CLIFFS NATURAL RESOURCES INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- CLF, with its decline in revenue, underperformed when compared the industry average of 4.5%. Since the same quarter one year prior, revenues fell by 17.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has significantly decreased to -$82.00 million or 222.83% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 165.7% when compared to the same quarter one year ago, falling from $107.00 million to -$70.30 million.
- You can view the full analysis from the report here: CLF Ratings Report