Market Overview

7 Trade Setups for Friday 07/22/11

Most of the trades outlined for Friday are contrarian plays, highlighting stocks that have recently been oversold/overbought and appear ready for a correction.

The beauty of contrarian trades is that the entry and exit parameters are usually clearly defined. Simply enter in stop out points and walk away.

Contrarian trades for Friday are:

1) Bill Barrett Corp. (NYSE: BBG): Shares of Bill Barrett began Thursday's session by gaining 3.5% from Wednesday's close to an intraday high of $52.04. The stock was steadily sold off throughout the session, however, and even wound up turning negative for a brief period before buyers pushed shares higher into the close – finishing in the middle of their intraday range at $51.39. The stock has been on a monster run over the past five trading sessions, gaining 16% in that time. Investors and traders appear unsure as to future direction, though, as highlighted by Thursday's indecisive action. Shorts can be aggressive and enter at current levels, with a stop out at the 52-week high of $52.04, which was set today. Bearish confirmation will be provided via a break below $50.19. Look for at least a 50% correction of the stock's latest move, which would put shares at $48.13.

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2) Waste Connections (NYSE: WCN): Shares of Waste Connections began Thursday's session by gaining 2.7% from Wednesday's close to an intraday high of $34.66. The stock was quickly sold off from that point, however, and ended up closing near its low of the day ($33.86) at $34.02. Waste Connections is currently trading 7% higher than its 50-day simple moving average (one year daily chart), which the stock has a history of testing after a big run. A short signal would be confirmed upon a break below $33.86, while the stop out would be the 52-week high of $34.66, which was set today - a potential gain of $2.40 versus a risk of $0.66.

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3) Genworth Financial (NYSE: GNW): Shares of Genworth Financial began Thursday's session by losing 20% from Wednesday's close to an intraday low of $7.56. The stock found some buyers in the afternoon hours, and the stock closed near its intraday high ($8.47) at $8.21. Genworth Financial is currently trading 21% lower than its 50-day simple moving average (one year daily chart), which is currently at $10.41. A buy signal would be confirmed upon a break above $8.47, while the stop out would be the 52-week low of $7.56, which was set today. Look for a close of the gap to $9.47.

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4) UDR, Inc (NYSE: UDR): Shares of UDR began Thursday's session by gaining 1.4% from Wednesday's close to an intraday high of $27.15. The stock was quickly sold off, however, and closed near its intraday low ($26.69) at $26.81. The stock is currently trading 6% higher than its 50-day simple moving average (one year daily chart), which is a level shares have a history of testing after a big run. A short signal would be confirmed upon a break below $26.69, while the stop out would be the 52-week high of $27.15, which was set today – a potential gain of $1.78 versus a risk of $0.34.

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5) Berry Petroleum (NYSE: BRY): Shares of Berry Petroleum began Thursday's session by gaining 4.1% from Wednesday's close to an intraday high of $60.56. The stock was steadily sold off, however, and ended up closing near the bottom of its intraday range at $59.51. The stock is currently trading 15% higher than its 50-day simple moving average (one year daily chart) and is in seemingly overextended territory. A short entry would be confirmed upon a break below $59.03, while the stop out would be the 52-week high of $60.56, which was set today. Look for a test of the last resistance level at $52.30 – a potential gain of $7.21 versus a risk of $1.05.

bry.jpgThe following trades are breakout plays, as the stocks listed appear set to breakout to higher levels:

1) Iconix Brand (NASDAQ: ICON): Shares of Iconix Brand hit a 52-week high of $25.70 in Thursday's trading session. More importantly, the stock broke above key levels of resistance and is ready to break out of its tight consolidation range. As the six month daily chart below shows, an inverted head and shoulders pattern has taken shape, which is a major bullish sign for investors. Look for the stock to breakout in the days ahead as shorts begin to cover their positions and new funds jump in.

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2) Immersion Corporation (NASDAQ: IMMR): Shares of Immersion hit a 52-week high of $10.09 in Thursday's trading session. More importantly, for the second day in a row the stock shrugged off early selling pressure and finished near its high of the day. Look for the stock to extend its gains in the coming sessions, as shorts get forced out. An entry upon a break above the 52-week high ($10.09) would provide short term upside confirmation.

immr.jpgNeither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Posted-In: Long Ideas News Short Ideas Small Cap Analysis Price Target Technicals Hot Pre-Market Outlook Best of Benzinga

 

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