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.
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.)
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.