These four stocks closed out last week with big moves, and are poised for continued action going forward. The ensuing activity expected this week in the big movers may be relevant to position traders looking to re-assess their holdings. Some of the stocks present immediate buy or sell signals, while other stocks will need to consolidate or pullback before a high-probability entry signal occurs. Swing-traders and day traders will find multiple opportunities within these stocks to exploit the volatility.
Google (Nasdaq:GOOG) launched 13.80% on October 18, breaking and closing above the $1000 mark for the first time. The stock gapped higher more than $75, and then proceeded to rally another $36 intra-day. Such a move is likely to trigger continued sizable movements over the coming weeks, although not as large as the move on October 18. A continued push above the high at $1015.46 is likely to spur continued short-term buying into the $1025 region. A drop below the October 18 low at $974 signals an attempt to close the gap. After prior gaps this past year (nothing of this magnitude) the stock has consolidated within the high (resistance) and low (support) of the gap-bar for the following week.
First Solar (Nasdaq:FSLR) jumped 8.7% on October 18, and will now challenge minor resistance at $50. The upward breakout of a declining wedge formation at the start of October indicates the current uptrend should continue. The next major area of resistance is $52, followed by $56. The target for the current rally is $55--near the top end of the resistance area. The former wedge and a rising trendline should provide longer-term support near $40. If a pullback occurs in the short-term, $44 to $42.50 is also a support area, offering an attractive risk-to-reward ratio on a long position as a stop can be placed just below $40.
After a 8.06% jump on October 18 Qihoo 360 Technology (NYSE:QIHU) is very close to its all-time high at $94.90. A break above the high could see the stock run to $105 based on the recently broken downward channel, or $109 to$110 based on a Fibonacci expansion level. Going long at this point is a higher risk trade since a viable stop is some distance away, although minor support at $90 and $85.50 could be used. A drop below $80 is a bigger warning signal, as the recent low at $75.02 will likely be retested and if broken the stock will already be in a significant correction.
Pilgrim's Pride (Nasdaq:PPC) saw a drop of 6.71% on October 18, and is now testing major support at $14.75. If the stock declines much below support a major topping pattern will be in place. The downside target for the pattern is $11. A stop can placed above the recent swing high at $16.54 providing a near 2:1 reward-to-risk ratio. On the other hand, a rally back above $16.60 indicates the long-term uptrend is likely to continue.
The Bottom Line
These stocks had big moves on October 18, and may result in follow-through activity this week. Day traders can benefit from the volatility in these stocks, while position trades can use the moves to re-assess whether it is time to take profits or see if the stock will continue to run. Swing traders or positions looking to get into these stocks may need to wait for an opportunity, as the large moves can create unfavorable risk to reward ratios since the distance to a stop-loss level has become that much greater. Only trade big mover stocks if you can afford the financial risk of doing so, as such moves can be reversed just as quickly if traders get nervous the stock is over-extended.
Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.