Today’s Big Stock: Lazard Ltd (NYSE: LAZ)

Lazard Limited is a financial advisory and asset management company. The company serves a diverse set of clients around the world, including corporations, partnerships, institutions, and governments and high net worth individuals. The company has two business segments: Financial Advisory and Asset Management. The company operates from 41 cities in key business and financial centers across 26 countries throughout Europe, North America, Asia, Australia, the Middle East and Central and South America.

To analyze Lazard’s stock for potential trading opportunities, please take a look at the 1-year chart of LAZ (Lazard Limited) below with my added notations:

After peaking in March of last year, LAZ trended consistently lower until October. While moving sideways throughout the fall, the stock formed a key level of resistance at $30 (navy). Now trading above $30, that same level has been acting as support for the stock. The concern with LAZ is that although having broke higher, the stock has not been able to keep up with the overall market. Could one small market pullback be enough to cause LAZ to break support?

The Tale of the Tape: LAZ has a key level of support at $30. A long position could be entered on a pullback to $30 with a stop placed below the level of entry. However, the weakness in the stock could be a setup for a short trade if the stock were to break below the $30 level.

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

Today’s Big Stock: Riverbed Technology, Inc. (NasdaqGS: RVBD)

Riverbed Technology, Inc. has developed solutions to the fundamental problems associated with information technology (IT) performance across wide area networks (WANs). Riverbed’s family of performance products includes solutions for branch offices, mobile workers, private data centers, private clouds and cloud computing. Riverbed’s products include Steelhead products and Cascade product line. The company’s solution, the Riverbed Optimization System, consists of hardware and software products that address the fundamental performance limitations of distributed computing environments. Riverbed’s flagship Steelhead products enable its customers to improve the performance of their applications and access to their data across WANs, by increasing transmission speeds by 5 to 50 times and in some cases by up to 100 times.

To review Riverbed’s stock, please take a look at the 1-year chart of RVBD (Riverbed Technology, Inc.) below with my added notations:

RVBD has created a couple of important price levels to watch. First, RVBD has formed a clear resistance at $30 (navy), which would also be an 8-month high breakout if RVBD could manage to move above it. In addition, the stock is climbing a short term, up-trending support level (blue) over the last 5+ months. These two levels combined have RVBD stuck within a common chart pattern known as an Ascending Triangle. Eventually, the stock will have to break one of those (2) levels.

The Tale of the Tape: RVBD has an up trending support and a clear $30 resistance level to watch. A long trade could be made on a pullback to the support, or on a break above $30. A break below the up trending support would be an opportunity to enter a short trade.

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

Today’s Big Stock: Icici Bank Limited (NYSE: IBN)

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).

H&S patterns can also form upside-down after a downtrend as well. This pattern would be called an Inverse Head and Shoulders pattern. It too would be considered a reversal pattern and the neckline would be a resistance rather than a support. To see such a pattern potentially being formed, please take a look at the 1-year chart of IBN (Icici Bank Limited) below with my added notations:

 

 

After moving lower for almost a year, IBN has almost formed what appears to be an Inverse H&S (red). 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.) IBN’s neckline is at the $40 level (navy). IBN would confirm the pattern by breaking up through the $40 resistance/neckline, and if it does, the stock should be moving higher from there.

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 simply if it broke through the $40 resistance level.  In short, whether you noticed the pattern or not, the trade would still be the same: On the break above the key $40 level.

The Tale of the Tape: After a long downtrend, IBN seems to have formed an Inverse Head & Shoulders pattern. A long trade should be entered on a breakout above the $40 level with a stop placed under that level.

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

Today’s Big Stock: Lam Research Corporation (NasdaqGS: LRCX)

Lam Research Corporation is a supplier of wafer fabrication equipment and services to the worldwide semiconductor industry. Lam Research designs, manufactures, markets, refurbish, and services semiconductor processing equipment used in the fabrication of integrated circuits. Lam’s etch and clean technologies enable customers to build integrated circuits. It’s etch systems shape the microscopic conductive and dielectric layers into circuits that define a chip’s final use and function. Its Customer Support Business Group provides products and services to maximize installed equipment performance and operational efficiency. Its customer base includes semiconductor memory, foundry, and integrated device manufacturers that make DRAM, NAND, and logic devices for these products.

To analyze Lam Research’s stock for potential trading opportunities, please take a look at the 1-year chart of LRCX (Lam Research Corporation) below with my added notations:

 

Over the last year, LRCX has found common areas of support and/or resistance on or at the increments of $5. First, notice the $45 topside resistance (navy), which was also previous support in May. The stock appears to be on its way back up towards that resistance. Next, you can see the $40 level (red/green) and the bottom level of support at $35 (purple).

The nice thing about LRCX 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 LRCX on rallies up to a $5 level or on any breakdowns of them. If you want a long play instead, you could buy LRCX on a pullback to a $5 level or on any breakout through one of those levels.

The Tale of the Tape: If LRCX rallies back up to $45, you could enter a short play. If it breaks above $45, you would certainly want to enter a long play. You could also buy LRCX if it comes back down to $40, or short the stock if it breaks that $40 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

Today’s Big Stock: Estee Lauder Companies, Inc. (NYSE: EL)

For today’s article I will be focusing on a stock that is approaching a 52-week high again. As a reminder, when it comes to 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.

The Estee Lauder Companies, Inc. is a manufacturer and marketer of skin care, makeup, fragrance and hair care products. Its products are sold in over 150 countries and territories under a number of brand names, including Estee Lauder, Aramis, Clinique, Origins, M.A.C, Bobbi Brown, La Mer and Aveda. It is also the global licensee for fragrances and/or cosmetics sold under brand names, such as Tommy Hilfiger, Donna Karan, Michael Kors, Sean John and Coach. These channels include over 30,000 points of sale, consisting of department stores, specialty retailers, upscale perfumeries and pharmacies and prestige salons and spas. In addition, its products are sold in freestanding Company-operated stores, its own and authorized retailer websites, stores on cruise ships, direct response television, in-flight and duty-free shops and certain fragrances are sold in self-select outlets.

To review Estee Lauder’s stock, please take a look at the 1-year chart of EL (Estee Lauder Companies, Inc.) below with my added notations:

 

After bottoming in October with the rest of the market, EL broke to a new high in November. However, the stock has been moving mostly sideways since then. During those last (4) months, EL has tested the $60 resistance on (5) separate occasions. The $60 resistance meets my definition of a clear resistance level that would signify an important 52-week high breakout if EL could manage to break above it.  If the stock does break above the $60 odds are it will probably be heading higher, most likely on a new uptrend.

The Tale of the Tape: EL has formed a key resistance level at $60, which would be a 52-week high breakout if EL could break above it. A long trade should be entered if EL breaks above $60, with a stop set below that level.

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