Three Swing Trade Ideas for Thursday, May 29

NEW YORK (TheStreet) -- Today's swing trade ideas are Quality Systems (QSII), SouFun Holdings (SFUN) and Shutterfly (SFLY).

1. First, let's look at Quality Systems, which develops health care information systems used to automate medical and dental offices.

Quality Systems traded positive on Wednesday, closing up 0.88% to $17.14 per share.

  • Wednesday's range: 16.74 - 17.16
  • 52-week range: 14.10 - 24.15
  • Wednesday's volume: 778,964
  • 3 month average volume: 472,363

Quality Systems looks good from a technical standpoint as it confirmed a rounded bottom breakout on May 22 and broke out on May 23. Then it had a small pullback before earnings.

The company reported earnings this morning, which were less than it had predicted, but the chart still looks good. The chart is in the oversold condition and is starting to consolidate at the current price level, which is at a long-term resistance level.

The next breakout level is at about  $17.50-$17.60, and so watch for increasing volume at that level. Volume has been increasing over the last four trading days and shows positive investor sentiment on the breakout.

A good entry level is anywhere above the t-line at $16.38. I'd set a stop at about $16.10, as I wouldn't want to see price action dip to that level.

There is overhead resistance at $17.26, $17.50, $17.98, $18.42 and again at the 200-day simple moving average at $19.59. I would target the 200-day simple moving average, which is +14% to the upside.

Stay long and let the trade break through this tough level, as it's had a hard time breaking above this level before. Let it ride, and stay long until you see a confirmed sell signal, or a close below the t-line.

2. Next, let's look at SouFun, which operates a real estate Internet portal, and a home furnishing and an improvement Web site in China. 

SouFun traded positive on Wednesday, closing up 4.87% to $13.36 per share.

  • Wednesday's range: 12.83 - 13.40
  • 52-week range: 10.03 - 99.72
  • Wednesday's volume: 6,579,928
  • 3 month average volume: 4,458,300

SouFun is a rounded bottom breakout, and typically I won't recommend a rounded bottom breakout unless it's at least 10% below the 200, but this chart looks too good to pass up. Yesterday's candlestick engulfed the 200-day simple moving average and the 50-day simple moving average.

Plus, during the last couple days, the stock has gapped up. Volume has been increasing during the last three trading days, and there hasn't been much selling pressure during the current bullish move. 

There is overhead resistance at $14.59-ish, $15.50-ish, and again at $16.29, which I'd say is the most compelling of the resistance levels. I would have my first target be at the $16.19 level, which is over 21% to the upside, and that would be awesome. If the trade keeps working, my ultimate target would be the 52-week high for +31% to the upside.

There is great potential in this chart, and so even if you targeted the first resistance level, that would be almost 10% to the upside. Don't be afraid to take profits at any of these resistance levels.

Having said that, you should still let the trade work, start with a quarter position and then add to this position when you see positive strength.

I'd set a stop below the t-line at $12.17, and stay long until you see a confirmed sell signal or a close below the t-line.  

3. Now let's look at Shutterfly,. which makes and sells digital personalized products and services in the United States.

Shutterfly traded down yesterday, but essentially went nowhere, closing at $41.50 per share.

  • Wednesday's range: 40.44 - 41.72
  • 52-week range: 36.30 - 59.93
  • Wednesday's volume: 802,834
  • 3 month average volume: 1,115,530

Shutterfly is a rounded bottom breakout also, and it tested the breakout yesterday. Yesterday's close wasn't that compelling, and this trade hasn't quite confirmed, although it did end up closing above the 50-day simple moving average and is still above the t-line.

Technically, a close above the 50 is confirmed, but I'll need to see a better confirmation to buy a full position, and so start out light on this one.

Shutterfly has been trading quite bullish for the last seven trading days, and so yesterday's candle was needed for little consolidation. 

There is overhead resistance at $42.75, $43.85, $45.33, and again at $47.62. I would target the 200-day simple moving average, as usual, which would be +16% move to the upside.

I'd set a stop at about $39.53. Again, stay long until you see a confirmed sell signal, or a close below the t-line.

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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.

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