The bulls have already started to fade after their strong run at the open today, leaving traders to wonder if this overbought market has any shot at moving any higher in the near future. If not, then these same traders need to focus on only the strongest trading possibilities. The best ones we found today are United Therapeutics Corporation (NASDAQ:UTHR), Discovery Laboratories, Inc. (NASDAQ:DSCO), EDAP TMS S.A. (NASDAQ:EDAP), and Vantage Drilling Company (AMEX:VTG). Here's a closer examination of each chart.
Some of you may recall I suggested a short trade on EDAP TMS S.A. (NASDAQ:EDAP)
back on September 11th
. The timing couldn't have been more miserable. I was looking for the stock to keep sliding lower following the August 20th peak at $5.95. Instead, that was the day the stock staged a recovery effort.
Fortunately - and I wasn't surprised
- that brief burst of bullishness failed to do any good, as EDAP TMS is now under our entry level. It was just a wild ride getting from there to here.
The reason I bring it up today is to update the chart of EDAP, and to inform you that a big, bearish milestone is looming. As you can see, a string of lower highs has been guiding the stock lower, while a couple of horizontal support levels have kept the sellers in check. The upper of those two support levels cracked today though, and I've got a feeling the lower one at $3.51 is on shaky ground. When/if that one breaks, I can see EDAP TMS giving up all the gains made back on August 19th when it flew from $1.37 to $3.76.United Therapeutics Corporation (NASDAQ:UTHR)
is another stock we've actually got an official trade on at this time. I shorted it in the newsletter back on September 23rd
My timing on UTHR was much better here than it was with EDAP. With United Therapeutics shares, I pretty much stepped in at the top (we shorted it at $48.24), anticipating the pullback we've seen since then. With the stock currently at $42.50, we're up about 12%. Not bad, but the trade isn't over yet.
My biggest worry was potential support at $44.96, which we did indeed watch UTHR find earlier in the month. Yesterday though, not only did United Therapeutics fall under support at $44.96 for the second time in three weeks, but it also moved to a much lower low. The stock's up a bit today, but on light volume. I still suspect we'll see UTHR close the gap at $33.69 before it's all said and done.
----------------------------------------------------------------------Sign-up for Free to Receive Future Commentary and
Trading Alerts on EDAP, DSCO, VTG, and UTHR.
Current owners may not even realize just how big the bullish powder keg they're sitting on with Vantage Drilling Company (AMEX:VTG)
is. I see this stock as being on the verge of a massive move higher.
To really show you the scope of what's going on here, I had to zoom out to a multi-month chart of Vantage Drilling Company. In so doing, I had to blur some of the recent detail on the daily chart of VTG. Sorry... a necessary evil to do the stock justice.
Vantage Drilling Company shares - for the most part
- have been contending with a resistance level at $1.92 (the horizontal blue line). We've seen a couple of blips above it, but nothing significant.... until now. Take a close look at the chart though. Bullish volume is getting stronger, and the stock's at $1.99 and pressing higher.
Considering VTG was at $8.00 a little over a year ago, coupled with the fact that crude oil prices are headed higher again, I have to consider Vantage Drilling Company a very strong speculative 'buy'.
And finally, a quick update on our Discovery Laboratories, Inc. (NASDAQ:DSCO)
commentary from September 30th
is in order.
At that point in time, DSCO had just surged, but simultaneously ran into a known resistance level. Based on history, I assumed - and rightfully so
- that Discovery Laboratories would retreat again as they had so many times before. DSCO fell from $1.41 then to around $1.08 before it stalled. That's not a bad 23% move, though I was holding out for more. After a couple of weeks of waiting though, my patience had been worn thin,
To our advantage, Discovery Laboratories has finally restarted that downtrend. DSCO hit a low of $0.91 today, pushing our potential gain up to 35%.
That may well be all we're going to squeeze out of any short position on Discovery Laboratories, but before we fold shop I'd suggest waiting (again) to see how things pan out. See, the $0.91 mark is also a major support line. If it cracks as well, I expect the DSCO to plunge back to the $0.50 mark. It all hinges on that support line. If you'd like to know of any changes in our opinion of UTHR, EDAP, DSCO, or VTG (or if we officially recommend them as trades), be sure to sign up for our free newsletter today. It's delivered weekly.