By: Zev Spiro
The major market indices continue to trade in a volatile range. Below is a macro long idea for MicroStrategy Inc. (MSTR) and a short opportunity in RealPage, Inc. (RP).
Chart 1: MSTR: A macro bullish continuation inverse head and shoulders pattern began developing in 2007. The pattern triggered with a breakaway gap, on January 26, which stemmed from the 2010 4Q results. The minimum expected price objective of the pattern is $182, obtained by measuring the height of the pattern and expanding higher by the same distance, from the trigger point.
Chart 2: MSTR: After the macro pattern triggered, the price climbed steadily until a recent consolidation, which formed a bull flag pattern. Last week’s breakout of the bull flag pattern provides a current buy-entry opportunity. Waiting for a pullback to the breakout, around $120, would have less risk, although, it may not pull back to that level. Target: $182, is the minimum expected macro objective. Protective stop: confirmed move below the bottom of the flag, which is at $114.30.
Chart 3: RP: A complex bearish head and shoulders pattern triggered on February 25th. Currently, a low-risk opportunity presents itself by shorting a bounce versus the neckline, which is resistance of the pattern. The neckline is currently around the $26 level. Target: Minimum expected price objective is 18 dollars, Protective stops: may be activated on a confirmed move above both, the neckline and the 50-day Simple Moving Average (SMA).
Updates:
1) STRI: Market Letter 2/24/11: approaching the short term target of $15. Conservative stops may now be trailed down to a confirmed move above $18.
2) PCX, ANR, AOS, MON, MAN: Market Letter 3/2/11: None of these setups have triggered yet but all are still valid.
If you are interested in receiving Zev Spiro’s market letter, please email zevspiro@oripsllc.com subject “T3”
*DISCLOSURE: Long MSTR; Short STRI, PCX, ANR, MON.
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