For the purest of technical analysts, two things matter: price
and volume. Sure, many will combine some degree of fundamental
analysis into the mix but if you're of the opinion that the
markets are becoming more technically driven, you know that the
charts can tell a great story all by themselves.
Here are four stocks that are telling an interesting technical
story right now.
Tata Motors (NYSE:
) This Indian auto maker formed a floor from September through
late November around $24.00. It tested that level again recently
and bounced to the upside. Currently it's only about $0.60 above
it with the 200 day moving average only about $0.20 above current
With strong support in place, a break above the 200 DMA
suggests a move to the next trend line resistance level around
$26.20. The risk/reward is favorable in this name.
) Deere is painting the picture of a broken stock but $82.80 is
the line in the sand. This, the 200 DMA, is the last reliable
hope for a stock that is in a strong downtrend. If it can hold
$82.20, that could set up bullish short term price action. If it
doesn't, only weak areas of support are below. With sell volume
high, a short term trade with a tight stop not far below the $82
level is the only advisable action.
General Motors (NYSE:
) With the stock hugging its 20 and 50 DMA, it sits right in the
middle of a wedge pattern that is tightening around it. As the
wedge tightens, a break out will occur. This is likely not far
into the future. Which way it breaks out is difficult to
forecast. Wedge patterns forming in stocks with high volatility
lend themselves to an options strategy known as a straddle.
Traders buy a call and a put of the same strike and
expiration. It's considered a neutral trade because the trader
doesn't know which way the stock will move. In order to profit,
the move has to be large but the direction doesn't matter.
) At first glance, the stock appears to be in a trading range but
closer examination finds a descending trend line forming. But the
stock formed a double top in 2012 at the $260 level. It later
broke out of the top and $260 has since become support. The stock
tested the level recently and bounced to the upside.
Its resistance level sits at its 20 and 50 DMA at roughly
$265. The stock, currently at $263.32, tested the resistance over
the past few trading sessions and failed. A break out to the
upside suggests a move to $270, then $275, and $283. Wait for it
to break out to the upside before making a trade.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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