Today’s Big Stock: Magna International Inc (NYSE: MGA)

Magna International Inc. is a diversified global automotive supplier. It designs, develops and manufactures technologically advanced automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers of cars and light trucks. It operates in three reporting segments-North America, Europe and Rest of World. At year-end 2010, Magna had 256 manufacturing operations and 82 product development, engineering and sales centers, in 26 countries. The company’s capabilities include interior systems, seating systems, closure systems, body and chassis systems, vision systems, electronic systems, exterior systems, roof systems, powertrain systems, vehicle engineering and contract assembly and hybrid and electric vehicles/systems. Magna’s products include CellForm Lightweight Structural Composite and FutureForm Thin Seat.

To analyze Magna’s stock for potential trading opportunities, please take a look at the 1-year chart of MGA (Magna International Inc.) below with my added notations:

 

 

MGA sold off drastically in August with the overall market. After moving mostly sideways from August until January, MGA broke back above its previous breakdown level of $45 (navy). Now that the stock is back above $45, that level should act as support again. In addition, I have highlighted the tendency for $50 (red) to act as either support or resistance in the past.

The Tale of the Tape: MGA is currently trading between its levels of $45 and $50. A long position could be entered on a pullback to $45 or on a break above $50 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 $45 or on a test of the $50 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

Today’s Big Stock: Golar LNG Limited (NasdaqGS: GLNG)

Golar LNG Limited is the owner and operator of liquefied natural gas (LNG) carriers and floating storage regasification units (FSRUs). As of mid-2010, Golar had a fleet of 13 vessels, 10 LNG carriers, three FSRUs and a 50% interest in a further LNG carrier. In June of ‘09, the company formed a wholly owned subsidiary, Golar LNG Energy Limited. By the end of 2009, it owned 73.8% of Golar Energy. Golar Energy specializes in the acquisition, ownership, operation and chartering of FSRUs and the development of liquefaction projects. In 2011, the company made the following acquisitions: Golar LNG Energy Limited (July), a floating storage and regasification unit Golar Freeze (October).

To review potential trading opportunities with Golar’s stock, please take a look at the 1-year chart of GLNG (Golar LNG Limited) below with my added notations:

 

After trending higher for well over a year now, GLNG has formed what appears to be a Double Top price pattern (blue). Double Tops are reversal patterns and are as simple as they sound: Rallying up to a point (T), selling off to a support, and then rallying back up again to approximately the same top (T). As with any price pattern, a confirmation of the pattern is needed. GLNG would confirm this pattern by breaking the $40 support (navy) that has been created by the Double Top pattern.

Keep in mind that simple is usually better. Had I never pointed out the Double Top pattern, one would still think this stock is moving lower if it simply broke through the $40 support level.  So, whether you noticed the pattern or not, the trade would still be the same.

The Tale of the Tape: GLNG has formed a Double Top price pattern with a $40 support level. Although a long trade could be entered on a pullback to the $40, the price pattern seems to imply an impending break of support. If that happens, a short trade should be placed with a stop set above $40.

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: Deckers Outdoor Corporation (NasdaqGS: DECK)

When it comes to the stock market, it can often be challenging to know what trade to make and when to make it. However, there are those trading opportunities that are clearer and more obvious. Usually, the “keep it simple stupid” trades tend to be the best 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 that might have made a move that fits that description would be DECK (Deckers Outdoors Corporation).

Deckers Outdoor Corporation is a designer, producer, marketer, and brand manager of footwear and accessories. Deckers sells its products, including accessories, such as handbags and outerwear, through domestic and international retailers, international distributors, and directly to end-user consumers, both domestically and internationally, through its websites, call centers, retail concept stores and retail outlet stores. Deckers market its products under two brands: UGG and Teva. UGG is a brand in luxury and comfort footwear and accessories, and Teva is a brand in multi-sport shoes, rugged outdoor footwear, and sport sandals. Deckers’ other brands include Simple, a line of sneakers and accessories; TSUBO, a line of casual footwear, and Ahnu, a line of outdoor footwear.

 

DECK had been holding a very important level of support at $75 (red) for the last 7 months. No matter what the market has or has not done over the last year, DECK has not broken below $75 . . . until yesterday. This break of support is probably not too terribly surprising considering the stock had not been keeping up with the latest market rally. When a stock breaks a significant support level, traders would expect that stock to move lower, which is what I would now expect from DECK.

Don’t forget to notice the huge volume spike on the break of support. Volume tends to add validity to a level break.

The Tale of the Tape: DECK had a very important support at $75. Yesterday the stock broke below that $75 level, thus should be moving lower. Although a short trade could be entered now, a better risk/reward entry could be made on a rally back up to that $75 level with a stop placed above that level. I break back above $75 would negate the forecast for a move lower.

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: Pier 1 Imports, Inc. (NYSE: PIR)

Most of the price levels highlighted in Today’s Big Stock are of the horizontal variety. They’re easy to identify and easy to trade off of. However, from time to time I also like to discuss important levels that are somewhat of a “moving target” in the form of up or down trendlines. One such stock forming an up trendline is that of Pier 1 Imports, Inc.

Pier 1 Imports, Inc. is a specialty retailer of imported decorative home furnishings and gifts. The specialty retail operations of the company consist of retail stores operating under the name Pier 1 Imports, which sell a range of furniture, decorative home furnishings, dining and kitchen goods, bath and bedding accessories, candles, gifts and other specialty items for the home. At the beginning of 2011 the Pier 1 had 1,046 stores, which includes 967 Pier 1 Imports stores in the United States and 79 Pier 1 Imports stores in Canada. The company also supplied merchandise and licensed the Pier 1 Imports name to Grupo Sanborns and Sears Puerto Rico, which sold Pier 1 Imports merchandise in a store within a store format in 38Sears Mexico stores and one store in El Salvador.

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

 

 

After bottoming out at $9 last year, PIR has been in a steady up trend since October. Along the way, PIR has formed a nice trend line of support (blue). Always remember that any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. As you can see, PIR’s trend line is very important to the stock since it has been tested on (5) different occasions. Currently, the trendline support sits at around $16.50

The Tale of the Tape: PIR has created a nice trend line of support over the last (5) months. A long position could be entered on a pullback to the trend line support with a stop placed under the entry. A short position could also be entered if PIR were to break the trend line of 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

Today’s Big Stock: Nabors Industries Ltd. (NYSE: NBR)

Nabors Industries Ltd. is a land drilling contractor and a land well servicing and work over contractor in the United States and Canada. The company markets approximately 550 land drilling rigs for oil and gas land drilling operations in the United States Lower 48 states, Alaska, Canada, South America, Mexico, the Caribbean, the Middle East, the Far East, Russia and Africa. As of year end 2010, the company marketed approximately 555 rigs for land well-servicing and work over work in the United States and approximately 172 rigs for land well-servicing and work over work in Canada.

To analyze Nabor’s stock for potential trading opportunities, please take a look at the 1-year chart of NBR (Nabors Industries, Ltd.) below with my added notations:

 

 

While seemingly bottoming out from August until January, NBR formed a strong level of resistance at $20 (navy) and a very common level of support at $16 (green). In the middle of February, the stock broke above the $20 resistance. Now that the stock appears to be pulling back, the $20 level should act as support. If the stock doesn’t pull back, a move above the $22.50 (blue support/red resistance) level could be a sign of another leg up for the stock.

The Tale of the Tape: NBR is currently trading between its levels of $20 and $22.50. A long position could be entered on a pullback to $20 or on a break above $22.50 with a stop placed below the level of entry. A short trade could be made on a break below the $20 in expectation of a fall back down to $16.

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