Todays Big Stock:PNM Resources, Inc. (Holding Co (NYSE: PNM)

PNM Resources, Inc. is an investor-owned holding company of energy and energy-related businesses. Its subsidiaries are Public Service Company of New Mexico and subsidiaries, Texas-New Mexico Power Company (TNMP) and subsidiaries and Power, L. P. and subsidiaries (First Choice). PNM is a public utility with regulated operations engaged in the generation, transmission and distribution of electricity and the transmission and distribution and sale of natural gas. TNMP is a regulated utility providing regulated transmission and distribution services in Texas. First Choice is a retail electricity provider operating in Texas. PNMR owns 50% of Optim Energy, which is focused on unregulated electric operations within the areas of Texas covered by Electric Reliability Council of Texas, including the development, operation and ownership of diverse generation assets and wholesale marketing.

Before discussing the potential trading opportunities with PNM (PNM Resources, Inc.), please review the 1 yr. chart of PNM that I have outlined below, with my added notations:

As you can see from the chart above, PNM can find support and/or resistance at each $1 increment.  Most recently, the stock has bounced at $16, $17 and then $18.
Lastly, there are (3) levels that appear to be more important than others though: $13 (l. blue), $15 (maroon) and $17 (red). The break above $17 in October was also a 52-week high breakout that so far has led to a 10%+ run-up. Could the next $2 increment, $19, be the next “more important” level?

The Tale of the Tape: PNM reacts to each $1 increment, but the odd dollar amounts seem to be more important. A pullback to $18 could be an opportunity to enter a long trade, but since a trader might expect $19 to be tough to get through at first, the better trade might be to wait for a pullback to $17. Either way, a stop should be placed below the level of entry.

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

Todays Big Stock: Benchmark Electronics, Inc. Com (NYSE: BHE)

Benchmark Electronics, Inc. is worldwide provider of integrated electronic manufacturing services. The Company was formed as a wholly owned subsidiary of Intermedics, Inc., a medical implant manufacturer based in Angleton, Texas. It provides its services to original equipment manufacturers of computers and related products for business enterprises, medical devices, industrial control equipment, which includes equipment for the aerospace and defense industry, testing and instrumentation products, and telecommunication equipment. The services that it provides are commonly referred to as electronics manufacturing services. It offers its customers integrated design and manufacturing services from initial product design to volume production, including direct order fulfillment and post deployment services.

Before discussing the potential trading opportunities with BHE (Benchmark Electronics, Inc.), please review the 1 yr. chart of BHE that I have outlined below, with my added notations:

BHE has created a very important support level at $12 (green) over the last 4 months. In the process, the stock has commonly found resistance at $14 (red). Even though the stock managed to break through that level in October, the stock has since fallen below $14 and is back to resisting it again. BHE is currently trading in between those levels and now appears to be on its way back up to the $14 level.

The Tale of the Tape: BHE is trading between (2) important price levels at $12 and $14. A rise to the $14 resistance would be a great opportunity to enter a short trade, while a break above that $14 could be a nice long trade. A trader could also enter a long trade on a pull back down to the $12 support, or a short trade on a break below the $12.

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

Todays Big Stock: Thermo Fisher Scientific Inc Co (NYSE: TMO)

Thermo Fisher Scientific Inc. is engaged in serving science. It provides analytical instruments, equipment, reagents and consumables, software and services for research, manufacturing, analysis, discovery and diagnostics. It operates through two segments: analytical technologies and laboratory products and services. Analytical technologies segment includes pharmaceutical, biotechnology, academic, government and other research and industrial markets. Laboratory products and services segment offers combination of products and services that allows its customers to engage in their core business functions of research, development, manufacturing, clinical diagnosis and drug discovery.

Please take a look at the 1-year chart of TMO (Thermo Fisher Scientific, Inc.) below with my added notations:

Over the last 4 months, the stock has seemed to find support or resistance on or at the increments of $5. First, notice the $55 topside resistance (navy), which was also previous support. Next, you can see the common $50 level (purple) and the bottom level of $45 (pink). The great thing about TMO is that it shows you how to trade it no matter what direction the market moves. If you like the short side of the market, you could either short TMO on rallies up to a $5 level or on any breakdowns of them. If you want a long play instead, you could buy TMO on a pullback to a $5 level or on any breakout through one of those levels.

The Tale of the Tape: TMO finds the levels of $5 important. These price points always appear to act as either support or resistance and sometimes both. If TMO rallies back up to $50, you could enter a short play. If it breaks back above $50, you could enter a long play. You could also buy TMO if it comes down to $45, or short the stock if it breaks that $45 support. Etc., etc., etc!

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

 

Todays Big Stock: Anadarko Petroleum Corporation (NYSE: APC)

When it comes to entering a stock hitting a 52-week high, I prefer to look for ones hitting a “NEW” high. To me, his would be a stock that hasn’t hit a new 52-week high in quite some time. In addition, and more importantly, I want the stock to have broken through a key area of resistance. This way I know that it wasn’t just any move higher, it was a key breakout. One such stock that fits that description would be that of Anadarko Petroleum Corporation.

Anadarko Petroleum Corporation is an independent oil and natural gas exploration and production company. Anadarko’s portfolio of assets includes positions in onshore resource plays in the Rocky Mountains region, the southern United States and the Appalachian basin. Anadarko operates in three operating segments: oil and gas exploration and production, midstream, and marketing. Oil and gas exploration and production segment explores for and produces natural gas, crude oil, condensate and natural gas liquids. Midstream segment provides gathering, processing, treating and transportation services to Anadarko and third-party oil and gas producers. It owns and operates natural gas gathering, processing, treating and transportation systems in the United States. Marketing segment sells much of Anadarko’s production, as well as hydrocarbons purchased from third parties.

To review Anadarko Petroleum’s stock, please take a look at the 1-year chart of APC (Anadarko Petroleum Corporation) below with my added notations:

APC has been trading mostly sideways for the majority of the year, while running into resistance at $85 (red). That $85 resistance meets my definition of a clear resistance level that would signify an important 52-week high breakout if APC could manage to break above it.  IF that were to happen, the stock would probably be heading higher, most likely on a new uptrend.

The Tale of the Tape: APC has formed a key resistance level at $85, which would be a 52-week high breakout if APC could break above it. A long trade could be entered if APC breaks above $85, with a stop set below that level. If you are bearish on the overall market and/oil in general, you could also short APC at $85 if the stock happens to get there.

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

Todays Big Stock: Canadian Natural Resources Limi (NYSE: CNQ)

It is nearly impossible to talk about chart patterns on stocks without eventually discussing the very common Head and Shoulders (H&S) pattern. An H&S pattern is a reversal pattern that forms after an uptrend. A textbook H&S pattern starts to form when a stock rallies to a point and then pulls back to a particular level (shoulder #1). Next, the stock will rally again, but this time to a higher peak (head) than the previous shoulder. After forming the head, the stock will pull back to the same support as the first shoulder did. Finally, the stock rallies a 3rd time, but not as high as the head (shoulder #2). The level that has been created by all 3 of the pullbacks is simply a support level referred to as the “neckline”. The formation of an H&S pattern warns of a potential reversal of the uptrend into a possible downtrend.

As with any chart pattern, a trader will usually not want to act on the pattern until the stock “confirms” the pattern. Confirmation is the break of the key level that has been created by the pattern.  In the case of an H&S, confirmation would be when the stock breaks the neckline (support).

What some new traders do not know is that H&S patterns can also form upside down after a downtrend. This pattern would simply be called an Inverse Head and Shoulders pattern. To see such a pattern forming, please take a look at the 1-year chart of CNQ (Canadian Natural Resources Limited) below with my added notations:

After a 7-month trend lower, CNQ has formed what appears to be an Inverse H&S (pink). I have noted the head (H) and the shoulders (S) to make the pattern more visible. (For future reference, if you imagine this pattern flipped upside down you would have a regular H&S pattern.) The neckline that CNQ’s Inverse H&S has formed is at the $38 level (green/red). CNQ would confirm the pattern by breaking up through the $38 neckline and the stock should be moving higher from there.

Lastly, keep in mind that simple is usually better. Had I never pointed out this Inverse H&S pattern, one would still think this stock is moving higher if it simply broke through the $38 resistance level.  In short, whether you noticed the pattern or not, the trade would still be the same: On the break above the key $38 level.

The Tale of the Tape: After a 7-month downtrend, CNQ formed an Inverse Head and Shoulders pattern. A long trade could be entered on a break above the $38 neckline with a stop placed under that level. In reality, since there is no guarantee that CNQ will break out at all, a trader could enter a short trade on a rise up to $38. Lastly, $33 (purple/navy) should act as support on any pull back.

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