By: Zev Spiro
The broad markets staged an impressive rally yesterday that resumed the powerful up-trend. Many individual names have positive chart patterns indicating higher prices for the near term. Heavy resistance for SPY is around the 132-133 area. If initiating new longs keep expectations in line with market outlook. As mentioned previously, the Russell 2000 Index has a potential bearish broadening top formation developing. The pattern has not triggered, while other major indices trend higher. It is important to monitor the divergence between the Russell 2000 Index and the other major indices to determine the health of the up trend. If initiating shorts, select names that have broken their uptrend and have been in distribution patterns.
Below are two long ideas in Changyou.com Ltd. (CYOU) and Lululemon Athletica Inc. (LULU), with smaller expectations, suitable for those that are short term and swing traders.
Chart 1: Changyou.com Ltd. (CYOU) triggered, and confirmed, a breakout of a bullish inverse head and shoulders pattern yesterday. Target: $47, Protective Stops: trigger on a confirmed move back below the neckline ($36.35).
Chart 2: Lululemon Athletica Inc. (LULU) is range bound, in a sideways rectangle pattern for approximately six weeks. The price is approaching the upward sloping trend line which may provide upward sloping support and a breakout.
Trigger: breakout above $74, Target: $82, Protective Stops: confirmed move back below the upward horizontal resistance line, which is approximately $74. Trail Stops: confirmed move below the upward sloping trend line, if the price is higher than $74.
If you are interested in receiving Zev Spiro’s market letter, please email zevspiro@oripsllc.com subject “T3”
*DISCLOSURE: No positions
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