By: Arkady Gevorkyan
Here are some highlights on a couple of trade ideas that are important to keep in mind over the coming days. Last week we saw the break in SPY of the wedge pattern to the downside, that was indicated by Scott Redler. Due to the fact we are in a correction-type environment I believe all the trade ideas should be relatively short term and be adjusted to the fact that stock market might become volatile again, with the VIX staying above 30 level. Although I think that SPY will continue its downside action, my trade idea for this week will be A123 Systems, Inc. (AONE) long for very short term trade (day or two).
On Thursday and Friday (May 14th), we saw that the stock was showing relative strength and held in when the market was going down. Such positive actions allow me to think that the stock is very oversold and short-term balance might be coming. The fact that it was up over 10% on Friday when the whole market was down, shows that there are still buyers in this market.
My short term target for that stock will be $12.50 – 13.00 level. If it breaks that resistance then the stock might try to balance back to 14. That move might take more than one–two days, and will be considered more as a long-term idea. However, the risk will be the recent all time lows of 8.10, which unlikely to be retested in the near future. (and there is potential news from the solar industry)
The second trade idea, that I will be playing close attention is Dendreon Corp. (DNDN). That stock has been very active recently due to the news that came out on this company. It has very good fundamentals, and by all means is likely to retest recent highs. However, taking into consideration current market environment, if the stock breaks $42.50 level and will trade below it, I will be short with the target back to $40.
However, if the market allows it and the stock breaks the channel on the upside, and goes through the $48 level. That is a decent resistance for now. This stock is likely to approach its all time high level of $57.67. As for now, before the break on either side happens, I will stay flexible trading this stock and will play it both long and short.
