Here are a few stocks that I am watching for technical breakouts. Note that while many of them have earnings coming up, these are not necessarily earnings plays as I am looking to enter for a quick pop on the breakout and I might be out the same day.
RYL - Long-term resistance is $25. The stock is making 5th attempt in nine months to break above this level. No reason to touch the stock until it breaks. But once it does, I expect a sharp rally to mid-30s which is the next congestion area from two years ago. Earnings out on 4/28. A simple trade is to go long June $25 calls, currently going for $1.40. Note that there was bullish activity today in two other homebuilders (HOV and BZH).
DNR - Similar story here. The stock is slowly moving higher now trading at $18. There is long-term resistance at $19 for over a year. A break above that could propel the stock to next level of resistance around $24 from two years ago. A simple trade here is to go long June $20 call on the breakout. Call are currently going for $0.45. Earnings out on 5/5.
OVTI - I really like this one. First, the stock brokeout above previous 52-week high of $17.50. For past month or so it has been consolidating between $17.50 (which is now support) and $19.25. Today, it closed at $18.98. There was elevated call buying today as 3,960 calls traded vs. only 177 puts. Call volume 2.5x daily average. 79% calls bought offer side. Biggest blocks at May $20 and Sept $17.50 and $20 stirkes. A simple trade is to go long June $20 calls on the breakout above $19.25. They're currently going for $1.10.
GLW - This name had major bullish activity for last several days in various strikes and months. Today again over 30,000 calls traded vs. 6000 puts. 59% calls bought offer side. The stock is less than 1% away from taking major resistance and previous 52-week high at $20.85. Earnings might be the next catalyst for breakout which comes out on 4/28. A simple trade here would be June 21/23 call spread, which is currently going for $0.60.
DHI - Yet another homebuilder stock staring closely at biting previous 52-week high and resistance of $13.90. This is the 7th attempt and thats why I don't want to get excited until it takes out $14. A break above that could take it quickly to $20-21 range and it could very well happen tomorrow given the high volume in the stock this morning. A simple trade here is to go long in-the-money June $13 calls. Earnings on 4/30 before market opens.
GE - I believe this is ready to start the next leg up. We first played it when it brokeout above $17.50 after long consolidation. The trend to watch now is the new channel in play as illustrated in the chart. Today, the stock found support at the bottom of channel and looks ready to move higher. Similar to last time, the trade is to go long in-the-money June $18 calls with a stop at $18.50. The near term target is $20.50 which is the upper band of channel.
MJN - First, $47.50 was clear resistance for a long time. Once we cleared that, now there is a new trading range of $50.50 and $53. The stock is 9 cents away from breaking of this tight range. Earnings were mixed last quarter but company guided better sales projection. A break above $53 could take the stock to first stop at $55. The play here is to go long June $55 calls on the breakout above $53.
Biggest trade idea for next couple weeks: Given monster bullish activity today in XHB (homebuilder ETF) and individual names HOV and BZH and nice technical setups in RYL and DHI, I think this whole group just like casino stocks is ready to take off.
Please note that I will not be posting above trades in a separate note if and when I fill the order. I'll be posting them right here in the commentary section when I get in and out. You will not get a separate email. I recommend subscribing to comments by email through the link below.
Good luck!
