Trades about to Happen February 18

“Trades about to happen” gives you trade set ups that are about to trigger. For each trade idea, i will give you the entry, potential targets, and other key information to glean from the charts.

More About “Trades about to Happen”

The idea behind “Trades about to Happen” is to keep your trading “pond” fully stocked with ideas ready to trigger so you can focus on executing trades rather than sifting through hundreds of charts to find set ups. Additionally its important to understand I am a technical trader. I do not consider fundamental factors for these set ups. If you incorporate fundamentals into your criteria, simple apply those considerations to the set ups / stocks of interest. When the fundamentals and technicals align, you should have a nice trade set up.

How to leverage “Trades about to Happen”

Not all the set-ups I provide will be appealing to you. For those you are interested in set alarms at either the level I suggest or at a level where you want to be given a “heads up” about the trade. Once your alarm triggers, you can re-focus on the stock and potential trade. Depending on your current portfolio positions, view of the market,  and a bunch of other factors you may or may not decide to take the trade.  If an alarm triggers and you don’t take the trade, re-set your alarm at a new level where you’d want to take another look.  In this way a stock won’t run away from you without you being aware.

Trades about to Happen

$GWW Grainger Daily

Industrial Supplier Grainger is about to execute a double bottom formation with a break above resistance at $117. The measured move for the structure is at or near the recent highs, so this one is well worth watching.

Please take note of the “air pocket” just above resistance where little if any price discovery has occurred. With a move into this space, I’d expect a fast move to $330 which is T1. A move above would open the door to $348 where the next level of resistance is.

The Trade

Alarm $317- $317.50. Go long if / when it triggers and look for a first target of $330. Set a stop at or around $315. Take the trade off if price falls back below.

$KMB Kimberly Clark Weekly

Personal products maker Kimberly Clark is working on a big inverse head and shoulders pattern. Price is flashing an emerging breakout. If you refer to the daily chart, you can see the breakout even more clearly.  The measured move has 20% upside from here. I don’t know if we can expect all that, but even half of that move on a $120 stock would be a nice win.

The Trade

Get long against $118. I’d set a stop around $116.  My first target is $126 with T2 up near $132. Beautiful set up. Let’s see where it goes.

$EL Estee Lauder – Weekly

A couple of weeks ago $EL popped $12 after earnings. It went from $138 to $148 and left a huge gap. Please pull up a daily chart to see the gap. With price stuck just below the prior highs, this sets up like a double top. THere is huge bearish divergence on the RSI and PPO indicators shown on the top panel. I have my doubts as to whether $EL has the horsepower left to go to all time highs. Regardless, $156 is certainly an area where both bulls and bears should sit up and take notice.

The Trade

Bull scenario:  If price pops $157.50 take it long against $156. This is not my favored scenario but price talks and opinions walk. Set a stop at $155.

Aggressive Bear Scenario: If you see price hesitating and unable to get through $156, put on a short against $156. Set a stop at $157.50

Conservative Bear Scenario: Wait for a break of $148 to get short. The real prize here is a $12 gap fill back to $136. That gap WILL get filled, we just don’t know when.  Alarm $148.25 for a heads up to refocus on the stock. If price enters the gap, go short with a $149 stop.  Target would be $136.

FYI – when I go short, its always via PUTS. I do not short the common shares.

$ANET Arista Networks Daily

Telecom equipment supplier Arista Networks gapped up $15 on Friday with earnings. This sets up nice as a potential bracket trade.  The high side of the range on Friday was $268.75, the low was $255.

The Trade

Alarm $269 and $255. The idea of a bracket trade is to “go with” whatever side of the range price takes you. If it breaks the topside, go long. If it breaks low go short.

While there is certainly upside potential here, there is resistance just above in the $270 – $275 area that may make it tough for price to get through.  On the low side there is that juicy $15 gap just waiting to be filled.  For me, I am more interested in the $15 gap fill potential but will still alarm both sides. If the market remains strong it may very well go higher.  One you enter, set your stop just inside the range.

$V Visa Daily

Visa is poised to break out above $145 for a run at new highs. If it does, I like it long.

The Trade

If price clears $145 take it long and set a stop in or around $144. Visa has been a strong performer so a new high is not out of the question if the market remains in bull mode.

Notes:

These are ideas and set ups. Please double check when earnings are set to be announced because the earnings reaction has the potential to torpedo any technical set up that may exist.

Also, set you stops according to your own risk tolerance. The ones I have provided are to be used only as a guide. The most important aspect of your stop is to honor them. Some trades work, some don’t. Honoring your stop will ensure your loss on a failed trade will be minimal.

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