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Breakouts
for May 18th: The first pick, SJM, is on its fourth feature as a Breakout pick having previously featured for March 29th, April 11th and May 4th. The stock has continued to exhibit good technical strength with an excellent support test (and potential 'buy' trigger) in the MACD trigger line. Bullish trend strength is rising [+DI; ADX > 20] and on-balance-volume is just shy of confirming Thursday's breakout with a resistance breakout of its own. The stock was mentioned in an article featured on the Motley Fool entitled "The Ultimate Buy Signal" (as it pertained to small cap stocks, not J.M. Smucker per se). The point-n-figure chart hasn't changed from its February 16th ascending triple top breakout and target of $62. The second pick, RAVN, was one of two fresh breakouts from Thursday's scans. The stock cleared $30.61 resistance after reporting Q1 earnings. The fundamental trigger was supported by a number of technical changes; notably a MACD trigger 'buy', a new reaction high in bullish trend strength [+DI; but ADX < 20, so bullish trend not yet confirmed], and a breakout in on-balance-volume. The stock also snuck in a barely visible "Golden Cross" in its 50-day and 200-day MAs mid-April. Watch for a close above $32 on Friday as this would confirm a double bottom at $25.62/$25.36 evident in the weekly chart shaped over the last 12-months. The projected target from this pattern is $39 which closely approximates the 2006 high for the stock around $42. The point-n-figure chart target of $43 comes from Thursday's double top breakout. My target is derived on an assumed follow through break from $42. The third pick, TWI, is a follow the trend play. The stock continued an advance beyond $29.19 resistance after announcing the production of new giant mining tires. The move was supported by a sharp breakout in on-balance-volume and a fresh MACD 'buy' trigger. The point-n-figure chart has surpassed its target of $26.50 and is looking stretched with a long upward tail from January 19th's ascending triple top breakout. However, volume over the last three days has been excellent with buyers killing an attempt by bears to drive it down. Trail a stop along the 50-day MA and/or the supporting trendline I have drawn to protect profits and allow the stock room to move.
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