Market Overview

Four Stocks with Compelling Chart Action

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For the purest of technical analysts, two things matter: price and volume. Sure, many will combine some degree of fundamental analysis into the mix but if you’re of the opinion that the markets are becoming more technically driven, you know that the charts can tell a great story all by themselves.

Here are four stocks that are telling an interesting technical story right now.

Tata Motors (NYSE: TTM)
This Indian auto maker formed a floor from September through late November around $24.00. It tested that level again recently and bounced to the upside. Currently it’s only about $0.60 above it with the 200 day moving average only about $0.20 above current levels.

With strong support in place, a break above the 200 DMA suggests a move to the next trend line resistance level around $26.20. The risk/reward is favorable in this name.

Deere (NYSE: DE)
Deere is painting the picture of a broken stock but $82.80 is the line in the sand. This, the 200 DMA, is the last reliable hope for a stock that is in a strong downtrend. If it can hold $82.20, that could set up bullish short term price action. If it doesn’t, only weak areas of support are below. With sell volume high, a short term trade with a tight stop not far below the $82 level is the only advisable action.

General Motors (NYSE: GM)
With the stock hugging its 20 and 50 DMA, it sits right in the middle of a wedge pattern that is tightening around it. As the wedge tightens, a break out will occur. This is likely not far into the future. Which way it breaks out is difficult to forecast. Wedge patterns forming in stocks with high volatility lend themselves to an options strategy known as a straddle.

Traders buy a call and a put of the same strike and expiration. It’s considered a neutral trade because the trader doesn’t know which way the stock will move. In order to profit, the move has to be large but the direction doesn’t matter.

Amazon (NASDAQ: AMZN)
At first glance, the stock appears to be in a trading range but closer examination finds a descending trend line forming. But the stock formed a double top in 2012 at the $260 level. It later broke out of the top and $260 has since become support. The stock tested the level recently and bounced to the upside.

Its resistance level sits at its 20 and 50 DMA at roughly $265. The stock, currently at $263.32, tested the resistance over the past few trading sessions and failed. A break out to the upside suggests a move to $270, then $275, and $283. Wait for it to break out to the upside before making a trade.

Posted-In: Amazon Deere General MotorsLong Ideas Short Ideas Technicals Tech Trading Ideas Best of Benzinga

 

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