NEW YORK (TheStreet) -- Good morning traders!
The market can't decide whether it wants to go up or down. Every time we get to potential breakout levels, be it up or down, the breakout never happens. The S&P 500 (SPY) and the Dow (DIA) were at breakout levels last week, but the resistance was too strong and the indices traded lower. In a choppy market like this, we need to watch our positions closely, and be ready for anything.
According to the Stock Traders Almanac, May 5, 6 and 7 are historically bearish days -- more than 60% of the time -- since January 1992. So keep that in mind.
1. First, let's look at Globalstar. The company provides mobile voice and data communications services through satellite worldwide. The company offers duplex two-way voice and data products, including mobile voice and data satellite communications services and equipment for remote business continuity, recreational, emergency response, and other applications. It also offers fixed voice and data satellite communications services and equipment for rural villages, ships, industrial and commercial sites, and residential sites. Plus the company sells satellite data modem services comprising asynchronous and packet data services.
Globalstar traded positive on Friday, with a big close: up 5.60% to $2.83 per share.
- Friday's range: 2.68 - 2.85
- 52-week range: 2.33 - 2.85
- Friday's volume: 4,364,324
- 3-month average volume: 1,831,020
Globalstar looks good from a technical standpoint, as it has been in an uptrend since September of last year. The stock's chart was trying to form the dreaded "head and shoulder" chart pattern over the last month and a half, but Friday's candle broke over the shoulder -- and broke that pattern. Shares traded over near term resistance, and on Friday reached a new five-year high at $2.85. Now look for shares to trade to the top of the current trend channel and continue in the same fashion it's been trading: up, up, up. Globalstar is also setting up for a J-hook, which is a very profitable chart pattern. Watch for the breakout confirmation today.
My first target would be to the top of the current channel at about $3.10, which is up 9.41% from Friday's close. Today will likely offer a cheaper entry. I'd like an entry at $2.70 to $2.80. I'd set a stop at $2.55, as I wouldn't want it to trade below this level. Stay long until you see a confirmed sell signal or a confirmed close below the t-line (8 exponential moving average, or 8 EMA). Let the trade work, give it time to marinate.
GSAT is reporting earnings on Wednesday after market close, so be watchful of that. I try not to hold over earnings, but do as you feel comfortable.
2. Next is Westport Innovations, which provides low-emission engine and fuel system technologies utilizing gaseous fuels. The company's technology and products enable light, medium, heavy-duty, and high horsepower petroleum-based fuel engines to use primarily natural gas and alternative fuels. It designs, manufactures, and sells compressed natural gas, liquefied petroleum gas and liquefied natural gas (LNG) components and subsystems to original equipment manufacturers.
Westport traded big on Friday, closing up 24.28% to $16.07 per share.
- Friday's range: 13.50 - 16.25
- 52-week range: 12.42 - 35.40
- Friday's volume: 7,007,245
- 3-month average volume: 1,182,200
Westport is in a "rounded bottom breakout" pattern. Rounded bottoms can be very profitable, that's why I trade them so often. The tricky part is, by default, the chart needs to be in a downtrend. So as with all chart patterns, we'll need confirmation. I can't say this enough! Westport had a big day on Friday, closing above the 50-day simple moving average, above near-term resistance, with exceptional volume. Today we need to see continued strength and interest. I'd like to have an entry inside Friday's candle, somewhere between $15.15 and $16.00.
There is resistance at Friday's high of $16.25, then again at $17.45-ish, and then again at around $19.00. The first target is the 200-day simple moving average at $21.32, which will be a 32% upswing. I'd set a stop just below the 50-day simple moving average at $15.07. Today, we will likely see a little pullback for a better entry. I would buy on any positive trading today. Stay long until you see a sell signal or a close below the t-line (8 EMA) with follow-through.
3. Next, let's look at Alpha Natural Resources. The company, together with its subsidiaries, is engaged in extracting, processing and marketing thermal and metallurgical coal in Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming.
Alpha Natural Resources traded positive on Friday, closing up 2.21% to $4.63 per share.
- Friday's range: 4.50 - 4.73
- 52-week range: 4.12 - 8.30
- Friday's volume: 11,093,158
- 3-month average volume: 12,387,500
I am long Alpha Natural Resources. I bought a starter position on Friday, when shares traded over the 50-day simple moving average. ANR is a rounded bottom breakout, and that is why I only bought a starter position. I need to see confirmation today.
To start, I only buy one-quarter of what I am willing to spend on a trade. Then on strength, I'll add to the position, one-quarter of my full intended position at a time.
Alpha Natural Resources formed a double-bottom over the last month and a half. Some call it a "W" pattern. But we haven't reached the breakout level yet. That level is at $4.88. Some traders buy on the breakout, some want it at the bottom. I like to enter somewhere in the middle.
There is overhead resistance at $4.88, $5.09, $5.24 and $5.58, so watch for consolidation at these levels. Target the 200-day simple moving average at $5.85, which is a 26.28% move from Friday's close. Stay long until you see a confirmed sell signal or a close below the t-line (8 EMA).
Good luck traders, as luck favors the prepared!
"People somehow think you must buy at the bottom and sell at the top. That's nonsense. The ideas to buy when probability is greatest that the market is going to advance."
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At the time of publication, the author was long ANR but held no positions in any of the other stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.