Top Swing Trade Ideas for Wednesday, July 23: NIC, Callon Petroleum, More

NEW YORK (TheStreet) -- Good day traders!

What an interesting time in the stock market. The S&P 500 (SPY) and the Dow Jones Industrial Average (DIA) keep reaching all-time highs -- but Tuesday the S&P failed to close higher, ending the day at the July 3 high of $198.20. There is an imaginary magnet pulling the S&P 500 price to $200, so it will likely reach this level in the coming week or so. Plus, the Dow formed a bullish engulfing signal on Tuesday, so it too will likely rise as well.

With these indicators on the rise, it's a good week to be a swing trader.

With that, today's top swing trade picks for are NIC (EGOV), Callon Petroleum (CPE) and E-House (China) Holdings Limited (EJ).

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1. First, let's look at NIC, which provides eGovernment services. The company enables governments to use the Internet to provide services to businesses and citizens in the U.S.

NIC traded up 1.53% on Tuesday, and closed at $16.62 per share.

  • Tuesday's range: $16.36 - $16.85
  • 52-week range: $15.00 - $25.99
  • Tuesday's volume: 245,564
  • 3-month average volume: 306,631

NIC looks good technically, as it is in a rounded bottom breakout that began on July 14, when it closed over the 50-day simple moving average. On July 14, the price action gapped up over 3% and the stock had a big bullish day, trading and closing over the 50-day SMA. Then, then following days there was some consolidation. Profit-taking and price action pulled back below the 50-day SMA. The rounded bottom breakout was unconfirmed after the first close over the 50-day SMA.

The real beauty in this chart occurred when the price action pulled down to its 52-week low on July 10. The stock chart formed a morning star candlestick signal. Then, the chart formed the trader's best friend: a doji followed by a gap up, which was confirmed the next day when it gapped up again. (A doji chart has a stock price that opens and closes in almost the same spot, but it may be wide-ranging in price over the course of the day.)

Great potential.

I would look for an entry anywhere above the 50-day simple moving average, which is at $16.45. I'd set my stop just below the 50-day simple moving average, then if the stock trades below that, get out. You can always re-enter when it comes back through the 50 SMA. Target the 200-day simple moving average at $20.37, which is 22% to the upside.

Stay long until you see a confirmed sell signal or a close below the t-line.

Up next: Callon Petroleum and E-House.

2. Now, let's look at Callon Petroleum, which engages in the acquisition, exploration, development and production of oil and gas properties properties in the Permian Basin in West Texas.

Callon traded up 3.14% on Tuesday and closed at $11.50 per share.

  • Tuesday's range: $11.09 - $11.56
  • 52-week range: $3.91 - $12.09
  • Tuesday's volume: 684,339
  • 3-month average volume: 856,628

Callon looks good from a technical standpoint, as it is in a pullback opportunity. The chart has been in a solid uptrend, and is up almost 200% in the last 52 weeks. Recently, the price action pulled back to the 50-day simple moving average, and appeared to be heading down. Then, on July 16 the chart formed a bullish harami, followed by a bearish harami, filled by a bullish engulfing signal. I've heard this called the Oreo cookie signal, silly, but true.

After all these great bullish signals, there is now confirmation that the price is heading back to the top of the current trend channel.

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I'd look to enter this trade anywhere above the t-line, at $11.22. I'd set my stop just below the 50-day simple moving average, which is at $10.83. I'd target the top of the trend channel, somewhere around $13. With charts that are in such great uptrends, it is a good idea to buy the dip, take a little profit on the peak, then repeat.

Stay long until you see a confirmed sell signal or a close below the t-line.

3. Lastly, let's look at E-House, which operates as a real estate services company primarily in the People's Republic of China.

E-House traded up 5.30% on Tuesday and closed at $10.53 per share.

  • Tuesday's range: $10.13 - $10.83
  • 52-week range: $4.38 - $17.28
  • Tuesday's volume: 3,772,432
  • 3-month average volume: 1,797,470

E-House looks good to me because it was in a downtrend, then made a reversal. Then it came back to test the previous lows, only to trade back up over the major moving averages. Yesterday's candlestick cleared the previous resistance levels, confirming a breakout. Price action is a bit far from the t-line, so it will likely pull back a little today. I'd like it to consolidate for a few days and let the t-line catch up with the price action. This will offer us a better entry.

With that, I would like to have an entry above $10.27, which is the previous high that was cleared in yesterday's trading. I would set my stop below yesterday's low, at $10.13. I would target the first overhead resistance level, at $12.31, which is 17% from yesterday's close. Raise your stop to secure your profits, and 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.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

TheStreet Ratings team rates NIC INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NIC INC (EGOV) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.1%. Since the same quarter one year prior, revenues slightly increased by 6.8%. 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.
  • EGOV has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, EGOV has a quick ratio of 2.26, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has significantly increased by 441.40% to $6.80 million when compared to the same quarter last year. In addition, NIC INC has also vastly surpassed the industry average cash flow growth rate of 18.54%.
  • NIC INC's earnings per share declined by 6.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NIC INC increased its bottom line by earning $0.48 versus $0.40 in the prior year. This year, the market expects an improvement in earnings ($0.58 versus $0.48).
  • 42.88% is the gross profit margin for NIC INC which we consider to be strong. Regardless of EGOV's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 14.33% trails the industry average.

TheStreet Ratings team rates CALLON PETROLEUM CO/DE as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CALLON PETROLEUM CO/DE (CPE) 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 revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 3.4%. Since the same quarter one year prior, revenues rose by 47.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 332.9% when compared to the same quarter one year prior, rising from -$0.80 million to $1.86 million.
  • The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.32 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • CALLON PETROLEUM CO/DE reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CALLON PETROLEUM CO/DE swung to a loss, reporting -$0.01 versus $0.06 in the prior year. This year, the market expects an improvement in earnings ($0.60 versus -$0.01).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CALLON PETROLEUM CO/DE's return on equity significantly trails that of both the industry average and the S&P 500.
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.

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