NEW YORK (TheStreet) -- Good luck traders!
1. First let's look at Darden Restaurants, which owns and operates full-service restaurants in the U.S. and Canada under the Olive Garden, Red Lobster, LongHorn Steakhouse, Capital Grille, Yard House, Seasons 52, Bahama Breeze, Eddie V's Prime Seafood and Wildfish Seafood Grille brand names.
Darden Restaurants traded up 2.57% on Monday, closing at $47.86 per share.
- Monday's range: $46.55 - $47.94
- 52-week range: $43.56 - $54.89
- Monday's volume: 2,779,797
- 3-month average volume: 1,567,580
Darden looks good because yesterday created a two-candlestick pattern called a doji gap up, often referred to as the trader's best friend. The doji gap up is starts with a battle between the bulls and bears, thereby forming a doji. Then, the following day, price action gaps up over the previous day's close and forms a bullish candle.
Plus, yesterday's price closed over the 50-day simple moving average, piquing my interest as a rounded-bottom breakout.
Since the beginning of the current short-term bullish trend, volume increases on bullish days, which tells us there is strength behind the positive trend, and volume decreases on bear days -- meaning there's no strength.
I'd look for an entry above the 50-day simple moving average, above $47.36. Today should offer a price within yesterday's trading range. I'd set my stop at $46.88, which is the pre-gap high. Then, I'd target the 200-day simple moving average, which is only up 4%, and look to add to the position as it clears the 200. Then target the overhead resistance levels, and ultimately target the 52-week high of $54.89 -- 14.6% to the upside from yesterday's close.
Stay long until you see a confirmed sell signal or a close below the t-line.
Next up: Medidata Solutions and Zebra Technologies.
2. Now let's look at
, which provides cloud-based clinical development solutions for life sciences in the U.S. and internationally.
Medidata Solutions traded up 2.62% on Monday, and closed at $45.01 per share.
- Monday's range: $43.53 - $45.20
- 52-week range: $32.10 - $68.21
- Monday's volume: 402,581
- 3-month average volume: 696,272
Medidata looks good technically, as the overall trend changed back on May 9, when a bullish engulfing signal appeared at the bottom. The trend reversal has confirmed since May, and the stock is now trading back over the 50-day simple moving average. Additionally, Medidata reported positive earnings on July 29, and has continued trading up since.
After Medidata reported earnings, the stock's price action traded up 11% from the previous day. The big bullish day was followed by a few days of consolidation and profit taking, and the stock traded back to the t-line. Yesterday's candlestick was a bullish Harami shape, which isn't a super strong signal, but implies positive bullish sentiment.
I'd look for an entry above the t-line at $43.54, and I'd use the t-line as my guide on this trade. With that, I'd set my stop just below the t-line, say $43.44. I'd target the 200-day simple moving average, at $51.53, and 14% to the upside. There is some overhead resistance at $48.27, so watch for consolidation at this level.
Stay long until you see a confirmed sell signal or a close below the t-line.
3. Lastly, let's look at Zebra Technologies, which manufactures and sells printers and related products worldwide.
Zebra traded up 2.79% on Monday, closing at $82.55 per share.
- Monday's range: $80.36 - $82.64
- 52-week range: $43.92 - $87.53
- Monday's volume: 459,064
- 3-month average volume: 528,556
Zebra Solutions looks to be in a long-term bullish trend. It is currently in a small pullback, offering us a cheaper entry price. Zebra is up almost 75% in the last 52 weeks, and the sentiment is clear with Zebra -- investors are here to stay. Zebra reported earnings this morning, and beat estimated earnings, so shares will likely continue to rise this morning and for the weeks to come.
This chart also formed a doji gap-up, so get in at the cheapest price you can, and add to this position on pullbacks and take profits at the peaks.
I'd look for an entry above the 20-day simple moving average, at about $82.21. I'd set my stop just below the 50-day simple moving average, at $80.03. I would target the top of the current trend channel, which is above $90, and take partial profits there, add to the position on pullbacks and repeat. Stay long until you see a confirmed sell signal or a close below the t-line.
Good luck traders!
Come see me at my second home and sign up for the two-week trial. You'll find a trading room with tons of professional traders who help each other learn and succeed.
At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
TheStreet Ratings team rates MEDIDATA SOLUTIONS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate MEDIDATA SOLUTIONS INC (MDSO) 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 robust revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and premium valuation."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MDSO's revenue growth has slightly outpaced the industry average of 15.9%. Since the same quarter one year prior, revenues rose by 22.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for MEDIDATA SOLUTIONS INC is currently very high, coming in at 77.93%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 2.75% trails the industry average.
- MEDIDATA SOLUTIONS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MEDIDATA SOLUTIONS INC reported lower earnings of $0.32 versus $0.35 in the prior year. This year, the market expects an improvement in earnings ($0.75 versus $0.32).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Health Care Technology industry. The net income has significantly decreased by 55.0% when compared to the same quarter one year ago, falling from $5.11 million to $2.30 million.
- Net operating cash flow has declined marginally to $24.10 million or 7.91% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: MDSO Ratings Report
Aaron Burt is based out of Sonoma County California, and is a contributor for hitandruncandlesticks.com. He focuses on short-to-intermediate term trades using candlestick analysis as his baseline for his trade ideas. He is a ghostwriter for candlestick analysts. He trades daily and analyzes charts daily. He trades charts, not news; news is subjective, but charts are factual. Follow him on Twitter @aarongallaher.