We’ll be getting long CBOE Holdings ($CBOE), Marathon Petroleum ($MPC), SS&C Technologies ($SSNC), Qihoo 360 ($QIHU), and GNC Holdings ($GNC) at Monday’s open, increasing our equity longs from 25 to 30.
This is not a reflection of any view on the broader market, or a comment on any one sector over another, this is simply identifying names that are in long-term uptrends and have provided what I believe to be a good risk/reward entry point. Let’s go through them in turn and demonstrate what I mean.
CBOE Holdings ($CBOE)
There are a lot of charts that look similar to this in the sector. Why did I choose this one over others? Because the invalidation point afforded me a better risk/reward trade. I look for what it would take to invalidate the trend for the timeframe in which I’m operating. I look at previous pivot lows on a daily and weekly basis. I then look at how far that is away from the current price and likely entry price. That then determines risk and in turn, position size. Ideally I wouldn’t want to see $CBOE close below $39.93, but as an initial stop I can give it room to $39.31.
Marathon Petroleum ($MPC)
The parameters on this are a little wider, it’s further away from its recent highs than the others, but I really like the break of that descending trendline coinciding with reclaiming the ground above the 20 and 50-day. A break of that $73.47 low might be too generous a stop, but with an initial move higher that can very quickly be moved up to the band of support in the $79.93-$77.38 zone. Anything more than a temporary visit there would warn us it may be tracing out a more complex pattern.
SS&C Technologies ($SSNC)
This is another good example where the 50-day needn’t be the be-all and end-all, I can comfortably stomach a test of that and use a clean break of $29.98 as my stop. That high volume break a month ago is masking the fact that most of the volume since has been coming in on the up days.
Qihoo 360 ($QIHU)
This one is pretty simple, it’s a nice steady uptrend, I don’t have to treat the MA’s like a religion, it can break them without breaking the overall trend, I’d use a break of that $41.05-$40.22 band on a closing basis as my stop.
GNC Holdings ($GNC)
I’ve been stalking this one for weeks so in the back of my mind I’m conscious of the fact I could be guilty of pulling the trigger early but I like what it’s done and with 2 or 3 decent tests of the 50-day I wouldn’t expect it to come back for more. If it did it would be a very cheap exit for me which is what makes it all the more appealing and a great risk/reward setup. Use a clean break of that $43.59-$43.32 area on a closing basis as a stop.