Skullcandy, Inc. (NasdaqGS: SKUL)

Skullcandy, Inc. develops and distributes headphones and other audio accessories to retailers throughout the United States and to distributors in various countries worldwide. The company is an audio brand that reflects the collision of the music, fashion and action sports lifestyles. The company is engaged in the distribution of headphones in specialty retailers focused on action sports and the youth lifestyle, such as Zumiez, Tilly’s and hundreds of independent snow, skate and surf retailers. It distributes through consumer electronics, mass, sporting goods and mobile phone retailers, such as Best Buy, Target, Dick’s Sporting Goods and AT&T Wireless. Skullcandy products are also sold through its Website. As of September 30, 2010, its product offering had over 1,200 SKUs across a range of categories, including headphones as well as speaker docks, mobile device cases, apparel and other accessories.

Please take a look at the 9-month chart of SKUL (Skullcandy, Inc.) below with my added notations:

As can be seen from the chart above, SKUL has seemed to find support or resistance on or at the increments of $2. First, notice the most recent level at $16 (red) that has been both resistance and support. Next, you can see the off and on, common level at $14 (blue). Lastly, there’s the bottom level of support at $12 (navy). SKUL provides you with trades no matter what direction the market moves. If you like the short side of the market, you could either short SKUL on rallies up to a $2 level or on any breakdowns of them. If you want a long play instead, you could buy SKUL on a pullback to a $2 level or on any breakout through one of those levels.

The Tale of the Tape: SKUL finds the increments of $2 important. Currently, the levels to watch are $12, $14, and $16. The stock just broke below the $16 level, so a short trade near $16 could be made with a stop placed above $16. If SKUL breaks above $16, you could enter a long position with a stop placed below the level. You could also buy SKUL if it comes down to $14, or short the stock if it breaks that $14 support.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Endeavour International Corporation (NYSE:END)

Endeavour International Corporation is an independent oil and gas company engaged in the exploration, development and acquisition of energy reserves in the United States and United Kingdom. Endeavour has four producing fields in the United Kingdom, including Alba, Bittern, Enoch and Goldeneye. The Goldeneye field represents nearly all of its gas production in the United Kingdom. As of December 31, 2010, Endeavour’s estimated proved reserves were 18.4 million barrels of oil equivalent, of approximately 70% were located in the United Kingdom and approximately 30% were located in the United States, and 19.4% of which were proved developed reserves. As of December 31, 2010, the four producing fields in the United Kingdom had a combined 1.6 million barrels of proved oil reserves.

Please take a look at the 1-year chart of END (Endeavour International Corporation) below with my added notations:

Over the last 9 months, END has formed several important price levels. The main price you will notice is the $10 level (navy) which was a strong resistance last year and most recently a support. Next, you can see the previous level of $8 (blue) from August until November. Lastly, the level of $6 (l. blue) was the bottom most level of support from October through December.

The Tale of the Tape: Currently, the levels to watch on END are $10, $8, and $6. If END pulls back to $10, you could enter a long position with a stop placed below $10. However, if the stock breaks the $10 support, a short trade should be made with a stop placed above $10. Other potential trades in the future: Long plays could be made on pullbacks to $8 and $6; shorts could be entered on breaks of $8 and $6.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!

Christian Tharp, CMT

MDC Holdings Inc. (NYSE: MDC)

M.D.C. Holdings, Inc. operates in two business segments: homebuilding and financial services. The homebuilding operations consist of wholly owned subsidiary companies, which purchase finished lots for the construction and sale of single-family detached homes to homebuyers under the name Richmond American Homes. The homebuilding operation operates in four business segments: West (Arizona, California, Nevada and Washington); Mountain (Colorado and Utah); East (Virginia and Maryland, which includes Pennsylvania, Delaware, and New Jersey), and other homebuilding (Florida and Illinois). The financial services and other segment consists of Home American Mortgage Corporation, which originates mortgage loans for the homebuyers; American Home Insurance Agency, Inc., which offers third-party insurance products to the homebuyers, and American Home Title and Escrow Company, which provides title agency services.

Please take a look at the 1 yr. chart of MDC (M.D.C. Holdings, Inc.) that I have shown below with my added notations:

MDC has formed a nice up-trending Channel over the last 3 months. A Channel is simply formed through the combination of a trend line support that runs parallel to a trend line resistance.  When it comes to a Channel, I always tell my students that any (3) points can start the Channel, but it’s the 4th test and beyond that confirm it. You can see that MDC has (5) separate test points between the Channel resistance (red) and Channel support (blue). Following the MDC Channel can provide you with both long and short trading opportunities.

The Tale of the Tape: MDC has formed a common chart pattern know as a Channel, in this case, an up-Channel. A long opportunity could be entered on a pullback to the Channel support, which at this point seems to be around $24. Short trades could be entered at Channel resistance OR if MDC were to break below the Channel support.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT

Williams-Sonoma Inc. (NYSE: WSM)

Williams-Sonoma, Inc. is a specialty retailer of products for the home. The company has two segments: direct-to-customer and retail. The core brands in both the direct-to-customer and retail channels include Pottery Barn, which sells casual home furnishings; Williams-Sonoma, which sells cooking and entertaining essentials, and Pottery Barn Kids, which sells stylish children’s furnishings. As of January 30, 2011, it operated 16 stores across Canada representing all of its retail brands. As of January 30, 2011, all of its Williams-Sonoma Home retail stores had been permanently closed.

To analyze William–Sonoma’s stock for potential trading opportunities, please take a look at the 1-year chart of WSM (Williams-Sonoma, Inc.) below with my added notations:

WSM has had a very strong resistance at $40 (blue) for almost the entire duration of this chart. Starting from the end of January 2011, WSM has tested the $40 level on (5) different occasions and almost a 6th time this past March. During the last (6) months, WSM has created an important level at $35 (red) as well, both as support and resistance.

The Tale of the Tape: WSM is currently trading between its $35 and $40 price levels. A long position could be entered on a pullback to $35 or on a break above $40 with a stop placed below the level of entry. However, if you are bearish on the stock or overall market, a short trade could be made on a break below the $35 or on a test of the $40 resistance.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!
Christian Tharp, CMT

The Brink’s Company (NYSE: BCO)

Even though it can often be challenging to know what trades to make and when to make them, there are those trading opportunities that are clear and obvious. Usually, the “keep it simple stupid” trades tend to be the better ones anyway. Although that doesn’t mean the trade will work out in your favor, at least you knew it was the right trade at that time. A stock with a trading opportunity that fits that description would be BCO (The Brink’s Company).

The Brink’s Company is a provider of secure logistics and security solutions, including the transportation of valuables, cash logistics and other security-related services to banks and financial institutions, retailers, government agencies, mints, jewelers and other commercial operations worldwide. Other services provided are armored transportation, ATM replenishment and servicing; network infrastructure services; secure global transportation of valuables; currency deposit processing and cash management services. Cash management services include cash logistics services; deploying and servicing safes and safe control devices; coin sorting and wrapping, integrated check and cash processing services; providing bill payment acceptance and processing services to utility companies and other billers, and guarding services, including airport security or Aviation Security.

Please review the 1 yr chart of BCO (The Brink’s Company) below with my added notations:

BCO has been trading mostly sideways for the last 8 months. During that time the stock has been holding a very important level of support at $22 (navy). No matter what the market has or has not done over the last 8 months, BCO has not broken below $22. However, the stock’s series of lower highs (blue) over the last 6 months is a concern considering the overall stock market has moved higher during that time.

The Tale of the Tape: BCO has a very important support at $22. A long trade could be made on a pullback to $22 with a stop placed under that level. However, the stock appears to be preparing to break lower, and if it does, a short trade should be made with a stop placed above $22.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!

Christian Tharp, CMT