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May 12

Entering Long Stryker ($SYK), CR Bard ($BCR), Alexion ($ALXN)

Here are three more longs we’ll be entering at Monday’s open. As I mentioned in this weekend’s review of open positions, we’ve had a flurry of new entries in the last week or so, a reflection of how many opportunities exist with a number of stocks in strong uptrends and attractive risk/reward setups.

For two of these names I want to credit Eddy Elfenbein as I know Stryker ($SYK), and CR Bard ($BCR), are both on his buy list and are mentioned in his weekly review I receive. As I’ve described before in my post on essential Twitter follows, Eddy has a very different approach to mine but he’s one of the few fundamentally minded people I read and if a stock on his buy list suddenly appears on my technical radar, it’s something I pay extra attention to.

The third name is Alexion ($ALXN) which is one we held recently but got stopped for a small loss. It pulled back briefly after its earnings pop and is now setting up again giving us another entry signal. Here they all are:-

 

Stryker ($SYK)

$SYK spent most of the last two months consolidating its most recent advance before putting together a solid breakout on increased volume on Friday. This is a name we’ve been watching for a while and having already seen some decent tests of the 20 and 50-day in the last few months, there’s no reason to suspect it couldn’t produce a sustained move higher through the 2007-08 highs in $69-77 range. A pullback to the MA’s would serve as an early warning it may be tracing out a more complex pattern, while a clean break of $63.70 would see us exit.

AlphaCapture

 

C R Bard ($BCR)

This is the last two years on a weekly chart and you can clearly see the major congestion pattern $BCR’s been navigating. The last two weeks have seen a strong resolution breaking up through the descending trendline as well as the previous pivot highs of January. A closing stop around $98 gives us a good risk/reward long here.

AlphaCapture

 

Alexion Pharma ($ALXN)

This daily chart of the last two years shows the context for this most recent move, a potential resumption of a strong long-term uptrend. We got what we thought was a good entry just a few weeks ago before getting stopped out cheaply after it fell away quickly ahead of earnings.

AlphaCapture

Zooming in to the last 3 months you can see the run higher after earnings was consolidated in a reasonably tight range for the next two weeks before Friday’s breakout. It’s also encouraging to see the volume that’s been behind the most recent big up moves. I’d be surprised if price reversed here again so I don’t think we need too wide a stop here like a previous pivot low below $90, I think instead $94 may be the level that tells us we’re wrong.

AlphaCapture

 

 

 

 

2 comments

  1. Kevin Li

    Hey John, I was just wondering, do the fundamentals of the companies you are opening positions in matter with your trades? Or is it just irrelevant?

    P.S. I am running my own little investment blog to show to others later on that I have experience called http://www.noobvestor.blogspot.com, it would be great if you could check it out!

    1. Jon Boorman

      The only way the fundamentals play a part are if the idea has been brought to my attention by a source that uses them, ie in the case of $SYK and $BCR from Eddy’s list, I know he’s a value player so that will tell me something about the likely fundamentals of the company, or for a name that came from the IBD list I know it means it passed their CANSLIM methodology, likely being a high growth innovative company. But I never analyze fundamentals myself, I don’t have the expertise.

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