Two long entries for Thursday’s open; Evercore Partners ($EVR), and EMC Corp ($EMC). Both have been on our watchlist for a while and now appear to have the combination of price trend and risk/reward we look for.
Evercore Partners ($EVR)
We’ve been stalking an entry on $EVR as it appeared ready to emerge from the triangle that formed since topping in March. Ordinarily Friday’s move above that descending trendline would have been enough to trigger a long entry, but at the time I felt the necessary stop made it less attractive an entry.
We can see it in greater detail below. Monday’s impressive advance left no doubt we were clear of that congestion area, and with a reasonably shallow 2 day pullback we have our entry signal.
As an aside, once in a trend, each strong advance and consolidation brings the invalidation point higher with it, so while it may appear counter-intuitive, an entry here at $42.30 is more attractive risk/reward to me than an entry would have been at $41.06. It’s all about where the stop would be, what would invalidate the trend at that time. Our stop would have needed to be a break of that $35.70-$35.30 range. Now however, a clean break of $39.28 will be evidence enough that the breakout failed and it’s undergoing a more complex holding pattern.
EMC Corp ($EMC)
This isn’t the typical setup for most of our holdings, as while $EMC is in a longer-term uptrend, it’s been struggling to overcome sustained weakness since peaking in March last year. Until now that is. It’s possible a more ‘classical’ technician than myself might conclude there is some form of reverse head and shoulders in here, but what interests me are those descending trendlines from December 2012. They represent the daily closing highs, and the weekly closing highs, and the implication of a breakout is clear.
Also, I don’t often have a fundamental angle in my rationale but I like how $EMC has an overlap with $CSCO which has performed very strongly since reporting off-quarter in May. $EMC has played catch-up in the last few weeks, and with vastly improved technicals now in place could possibly attract further attention within the sector.
The more conservative player might want to wait for the 3/14 close of $25.62 to be cleared, but Monday’s trendline break and close above the June high, as well as today’s follow through, was more than enough for me. There’s different levels of risk too, ultimately I think as an initial stop we still need to use those last daily and weekly pivot lows around $23.50. A swift move higher from here and that stop can be trailed up to the 7/5 close of $24.13 near the 50-day. More aggressive players could use that as their stop from the outset.