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Poised for a Lift

These three charts all offer fine risk-reward scenarios and they'll make for nice buys at these key levels.
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The major indices bounced off very clearly defined levels of support last week to close near their highs. As I note in a Columnist Conversation post Friday, certain chart formations may have appeared to be positive hammer candles at first glance, but they could have been interpreted more as bearish hanging man candles -- and, in that case, a period of backing and filling would be constructive.

We may see some of that over the next few days, but as long as the integrity of those prior support levels remain intact, the intermediate-term outlook will be positive. In that context, stocks that have recently tested support levels of their own and looked poised to move higher, offering trading opportunities with good risk-reward scenarios.

Burger King Worldwide (BKW) -- Daily

Source: StockCharts.com

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Burger King Worldwide (BKW) has been trading in a horizontal consolidation channel for the last four months. Last week it successfully retested channel support and its 200-day moving average. The relative-strength indicator is crossing above its 21-period signal average, and the money flow index -- a volume-weighted relative strength measure -- is moving out of an oversold condition. At its current price, the stock offers a long entry point with a very tight stop loss level under channel support.

Bemis (BMS) -- Daily

Source: StockCharts.com

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The packaging company, Bemis (BMS) has been trading in a descending channel for the last four months and recently held at the intersection of the channel bottom and a long-term support level in the $38 area. Moving-average convergence-divergence (MACD) is making a bullish crossover, and the relative-strength indicator is crossing above its signal average. If the stock breaks above the channel downtrend line, that would make for a good long entry point that would still offer a close stop loss under the support line.

QLogic (QLGC) -- Daily

Source: StockCharts.com

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Networking company QLogic (QLGC) recently tested a support zone going back to August, and in Monday's session it's testing resistance from the 200-day moving average. The money flow index is moving out of an oversold condition, and the relative-strength indicator is crossing above its 21-period average and centerline. The stock is another candidate that offers a good risk-reward ratio at its current level.

At the time of publication, Moreno had no positions in the stocks mentioned.