Technical Setups for the Week

BALTIMORE (Stockpickr) -- Light trading is the name of the game this week as the holiday weekend and remnants of the weekend's East Coast snowstorm wreak havoc on the market's normal trading rhythm.

Although a slew of economic data is slated to be released to end 2010, the fact that trading volume for most indices is only around half of its average levels is pretty hard to ignore right now. As a result of that lighter volume, expect traders to avoid pulling the trigger on most stocks.

But while trading will be left up to the few this week, that doesn't mean it's time to become lazy when looking at trade setups. After all, with a return to normalcy kicking off with 2011's first trading day next Monday, there should be ample opportunity to make up for Wall Street vacations. To make the most of those, we're once again turning to the technicals for a group of promising setups.

Related: Must-See Charts: Vodafone, AmBev, Intel

Remember, 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.

Here's a look at this week's potential trades.

Vina Concha y Toro

Chilean wine exporter Vina Concha y Toro ( VCO) has enjoyed toast-worthy performance in 2010, the result of increased interest in the South American country's viticultural offerings. Shares of Vina Concha y Toro are up more than 16% since January, and shareholders could be on the verge of even higher returns in 2011 thanks to a bullish technical pattern forming in shares.

Since the beginning of August, when shares of VCO topped, this stock has been forming an ascending triangle pattern marked by resistance at $50 and higher lows. As shares get squeezed between that upside resistance level and the trend line formed by those higher lows, the potential for an upside breakout above $50 becomes significantly more likely.

That said, now's not the time to pick up shares of this stock. While an ascending triangle is in its nascent stages -- as it is now -- the potential for a breakdown is real. Instead, wait for the breakout to occur, then go long, to maximize the likelihood of picking up palpable gains. Shares of Vina Concha y Toro should be able to find significant legs on a move above $50.

FactSet Research Systems

Financial data provider FactSet Research Systems ( FDS) is another stock that's seen a powerful rally in 2010 -- ub this case, a 44% rally year-to-date. Like Vina Concha y Toro, this stock is also seeing a bullish pattern forming in shares that could take shareholders to higher ground in 2011. Traders should take note.

FDS has been locked in an uptrending channel for the last several months, bouncing between higher support and resistance levels as shares climbed from lows of $55 to nearly $100 today. But triple-digit prices could be well on their way as shares bounce higher off of support.

To take full advantage of this pattern, I'd recommend waiting for trend channel support to approach the $95 level where shares currently sit and placing a protective stop just below that level at around $92. Watch for an exit point at the top of the channel.

Major holders of FactSet include Ron Baron at Baron Funds -- the stock makes up 2.4% of his total portfolio -- and Chuck Akre at Akre Capital Management.

Computer Sciences

Computer Sciences ( CSC) has been a stock worth watching in the last few weeks as share prices have been buoyed by murmurs of the company's potential attractiveness as an acquisition at its current valuation. Just this month, the company boosted its dividend payout by 33.3%.

But while the Wall Street rumor mill could be less enticing than the company's technical setup right now.

Shares of CSC are currently forming a large inverse head-and-shoulders pattern, a bullish breakout pattern that points to a substantial climb in share price right now. This pattern "triggers" when shares break above shoulder level, the slanted blue line in the chart above. As you can see, shares are flirting with that level this week.

While the inverse head-and-shoulders pattern is one that's especially prone to fake-outs, its notoriety and the size of the moves of successful H&S patterns makes this worth watching nonetheless. That said, be vigilant if you're considering taking this long-side play in the first weeks of 2011.To see these plays in action, check out the Technical Setups for the Week portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

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At the time of publication, Rhino Stock Report was long CSC.

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.

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