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Freeport McMoRan (FCX) Solders A New 9-Month High

Freeport McMoRan (FCX) hit new 9-month closing highs today. As a miner of Copper and Gold, the strong price action in the face of weakness in the underlying metals is a very bullish trait. When the stock is outperforming the base metal, that can be a very good signal. The last panel shows a breakout on FCX compared to Copper. The second last panel shows FCX compared to Gold. The last two big thrusts in the stock have broken relative performance trend lines.

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Ingersoll-Rand Surges off Support

Ingersoll-Rand (IR) is showing renewed signs of life with a surge off support and two mini breakouts. Note that IR is part of the industrials sector and this sector is showing upside leadership with a 52-week high recently. First and foremost, Ingersoll-Rand is in a long-term uptrend with a 52-week high in October and a positive PPO(50,200,0). Note that the PPO(50,200,0) is positive when the 50-day EMA is above the 200-day EMA. 

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Intel Testing Key Short-Term Support

On October 26th, Intel (INTC) posted quarterly earnings results and beat both revenue and EPS estimates.  It resulted in a very strong gap higher the next morning and then INTC continued rising, tacking on another 10% within a week.  But INTC became very overbought with an RSI above 90 and needed a pullback.  Since topping in early November, INTC has lost close to 10% and is now testing the top of gap support and its rising 50 day SMA:

The RSI has fallen back into the 40s (black arrow) and that's typically a level where we see prices turn higher again in an uptrend.  The huge rally in September and October began after an RSI 40 test in August so I like the odds of a similar reversal at or near the current level.  The initial Fibonacci retracement level is also quickly approaching and could produce additional technical buyers at that 38.2% retracement.

Happy trading!

Tom

The View Gets Clearer for Valeant (VRX)

The view for Valeant (VRX) improved substantially this week as the stock broke out of a well-defined base. From a  technical analysis perspective, this is a text book breakout. The stock has based by building a one year range. The new 52-week high broke out of the base this week. The view is a little clearer now for the owner of Bausch and Lomb eye care products. 

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Here's A Pharma Printing A Hammer After Filling Gap

I'm constantly looking for short-term trading opportunities and Perrigo (PRGO) fits the bill.  After reporting better-than-expected results in its latest quarter, PRGO gapped up strongly and today filled its gap before finishing on a solid note to print a hammer (blue circle below) - many times a signal of a bottom after a downtrend.  Reported revenues of $1.23 billion easily exceeded expectations of $1.17 billion.  In addition, EPS of $1.39 blasted past the $1.10 consensus estimate.  Now the issue is whether PRGO can overcome a very weak pharma group ($DJUSPR) to bounce from gap support:

The early September breakout occurred on heavy volume and that now represents the best price support near 79.  Gap support is closer to 81 so that support range of 79-81 needs to hold.  The recent high after earnings is a solid target at 91.  The reward to risk opportunity here grows as PRGO moves closer to its support range.

Happy trading!

Tom

United Technologies Forms Classic Continuation Pattern

United Technologies (UTX) looks ripe for a breakout to new highs as a bullish cup-with-handle pattern takes shape. Note that UTX is in the industrials sector and the defense-aerospace industry group. The Industrials SPDR (XLI) and the iShares Aerospace & Defense ETF (ITA) both hit new highs on December 1st. The chart shows UTX in a long-term uptrend because it hit a new high in July and the 50-day EMA is above the 200-day EMA. It looked like the stock was breaking down with the gap-plunge in early September, but this turned into a high-volume selling climax. The September low marks the bottom of the cup, the November low marks the handle low and the pattern highs mark resistance. A break above this resistance zone would signal a continuation higher. Signs of increased buying pressure emerged last week as the stock surged towards rim resistance on above average volume.  

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Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
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Clorox (CLX) Makes Fresh New Highs

Clorox broke out on Monday to news highs and continued the move today. With the rotation from growth to value or growth to defensive, this would fit right in.

The SCTR is pushing into the top quartile, which I particularly like. The relative strength is improving, the news highs are bullish, the volume accelerated on the breakout and the MACD is pointing higher. All that to say the stock looks set up for a big move here.

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Mylan Continues its Move with Expanding Volume

Mylan (MYL) was hit hard in early August with a plunge to 30, but firmed and recovered with a gap and surge to the upper 30s. The stock consolidated after this gap-surge and recently broke out with above average volume. Notice that the gap-zone held in the mid 30s as the stock consolidated in the 35-39 area. A consolidation after a sharp advance represents a rest that is needed to digest gains and alleviate overbought conditions. The consolidation did its job for eight weeks and ended with Friday's breakout. In addition to the breakout, note that upside volume outpaced downside volume over the last two weeks. This means buying pressure is increasing and validates the breakout. I would consider this breakout valid as long as 36 holds and re-evaluate on a close below this level. 

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Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
*****************************************

Shake Shack Starts Shaking (SHAK)

Shake Shack (SHAK) started shaking this week. The stock made new 16 month highs today. This surge above a well defined base is very bullish. The SCTR is pushing back up above 70. The 10 week moving average has moved above the 40 week moving average. The price has broken above significant resistance, going back to August of 2016.

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Rising Treasury Yields Signal Two Things

There's a renewed selling effort in U.S. treasuries and that's sending yields soaring.  Bullish performance in small caps, transportation stocks (especially railroads), financials, industrials and consumer discretionary are painting a picture of a strengthening economy ahead and the selling of treasuries would certainly support that theory.  With the FOMC meeting less than two weeks away, it's apparent that the bond market is anticipating another rate hike at the conclusion of the meeting.  Traders are also pouring into financial stocks, particularly banks ($DJUSBK), as yields rise:

The breakout of the continuation symmetrical triangle pattern suggests we'll see further increases in the yield as we approach the FOMC meeting and with those higher treasury yields, I'd look for more money rotating into financial stocks.  The positive correlation between the 10 year treasury yield ($TNX) and the direction of bank stocks is rather obvious and I'd expect it to continue into December.

Happy trading!

Tom