The Technical Outook For Top Stock Gainers

By Cory Mitchell | Updated September 02, 2014 AAA

These four large-cap stocks were bid up on January 28, being among the top gainers. All were up more than 5% on the day, but have very different technical outlooks. In some cases the buying indicates the trend is continuing, offering a chance to get in. While for others, the short-term price spike could be used as an exit or opportunity to get short.

Netflix (Nasdaq:NFLX) continues it's strong uptrend off the mid-2012 low at $52.81, closing out January 28 at $406.77, up 6.7% on the day. This is the first close solidly above the prior high of $389.16 set back in October, and indicating the uptrend is still going strong. A trend channel provides upside targets between $418 and $425, although $$440 to 445 is the target in case of a "throw-over." A throw-over is when a rally sees a burst of buying, pushing the stock out of it's former trend channel. This is typically a sign of a top. A drop back below the recent low at $370.56 will likely fill the gap seen earlier this month as the price heads toward the support area between $340 and $320.

Melco Crown Entertainment (Nasdaq:MPEL) rallied 6.15% on January 28 following several days of selling pressure. Major lower-lows weren't created during the selling pressure, so the uptrend remains intact. The decline was more significant than anything seen over the last year though, so the drop is noteworthy and therefore some caution is warranted. If the uptrend continues, it should do so from here, holding above the recent low at $37.38 and progressing above $45.48 (52-week high). On the other hand, if the rally stalls out before reaching $45.48, and/or reverses back below $37.38, a larger correction is underway. If the correction develops the initial downside target is $35 with a further target near $30 if selling pressure continues.

American Airlines (NYSE:AAL) moved up 5.9%, indicating that it's uptrend is continuing.  The stock recently held above support at $28.50 on a pullback and closed at a new high of $31.96 on the one day jump. $33.25 is the next short-term target based on Fibonacci Extension levels. A drop back below the recent low of $28.67 indicates a broader decline may be forth coming. The next support area is $26 to $25.

After strong selling the last several sessions T.Row Price (Nasdaq:TROW) jumped 5.48% on January 28. In this case, the jump appears to be a better spot for longs to get out than to continue to buy or hold. The aggressive recent selling breached prior swing lows, indicating the trend has shifted to down. The current bounce is unlikely to be able re-claim the prior high of $84.41. Selling pressure off the $80.70 close can be viewed as a sell signal, although waiting for a drop below $78.61 may provide more confirmation the downtrend has resumed. Downside target is $74.

The Bottom Line

Price can move a lot in one day, but the information is only valuable when placed in a context. Sometimes these days confirm the current outlook, such as a nice up day during an uptrend. Other times, they may occur against the current trend, offering an exit to those still holding long positions, or providing an opportunity to get short in anticipation of more downside. In either case, risk should always managed according to your personal trading plan.

Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.

comments powered by Disqus
Related Analysis
  1. Four Chart Patterns To Watch This Week
    Chart Advisor

    Four Chart Patterns To Watch This Week

  2. Commodity ETFs And Chart Patterns
    Chart Advisor

    Commodity ETFs And Chart Patterns

  3. Triangle Chart Patterns Set To Break Out?
    Chart Advisor

    Triangle Chart Patterns Set To Break Out?

  4. Stocks With Triangle Chart Pattern Set-ups
    Chart Advisor

    Stocks With Triangle Chart Pattern Set-ups

  5. Discounted Chinese Casino Titan Could Surge Nearly 40%
    Investing

    Discounted Chinese Casino Titan Could Surge Nearly 40%

Trading Center