The market's recent rebound still hasn't made stock-picking a 'rising tide lifts all boats' proposition the way it was six months ago.... investors still need to choose wisely. That said, Chattem Inc. (CHTT), India Globalization Capital, Inc. (IGC), NutriSystem Inc. (NTRI), and WidePoint Corp. (WYY) are forming the most trade-worthy charts at this time. Here's a detailed look at each.
The chart of
WidePoint Corp. (
WYY) really doesn't do it justice - you can't see where the stock was (or how ugly it was) prior to April. Nevertheless, we've zoomed in to a near-term chart because we wanted to focus in on something else for WidePoint.... a looming breakout.
The key here is the resistance at $0.74. WYY has tested that ceiling three times now since August, with the third coming today. It failed to crack that line the first tow time, but each time WidePoint Corp. retreated, they came back even stronger - and on better volume.
What you can't see on the near-term chart is how WidePoint shares have made a complete shift in direction since the implosion that began in 2006; WYY was hitting highs of $3.00 at the time. This one's oh-so-close to starting a real recovery effort.
India Globalization Capital, Inc. (
IGC) isn't a new idea for us - this is a follow up on the comments we made regarding the stock back on September 28th. In a nutshell, what we figured would happen, did happen.
Just to be clear, we were - and are - bullish on India Globalization Capital. Our only problem with the stock a couple of weeks ago was that it was overbought, had gapped, and was simultaneously contending with a major Fibonacci retracement line. Well, IGC did indeed pull back.
Take a loser look at the chart though. The selloff was on light volume, and IGC is popping again today on stronger volume. In other words, India Globalization Capital is once again attacking a key ceiling. Keep this one close at hand - it's on breakout alert.
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You can't see it on this close-up chart either, but
Chattem Inc. (
CHTT) is also attacking a long-term support line. It's not quite happened yet though, so don't jump the gun.
What you can see, however, is how Chattem shares have more-recently formed a rising support line. Moreover, the rising support and falling resistance are almost to a point, and forcing CHTT past one or the other. As it stands now, it appears it's the upper edge of that triangle doing the breaking.
Just in the name of safety, it would be wise to wait for Chattem shares to close above last week's high of $66.48 before pulling the trigger. We're seeing decent volume flow into CHTT now, but a move above that line would likely draw the number of buyers needed to make a longer-term bullish move.
Congratulations to anyone who owned
NutriSystem Inc. (
NTRI) before today, but you may want to go ahead and lock in your profit. Between the gap and the volume, the stock's not likely to move higher from here.
But wait a minute... isn't volume a good thing? A trend of increasing volume is a good thing. A volume spike - like the one we're seeing for NutriSystem shares today - is usually a pivot or reversal point. Add in the gap NTRI made that took the chart all the way back to a major resistance level, and you just don't have the right scenario for more upside... quite the opposite, in fact.
As for where NutriSystem could end up, there's a strangely-consistent support line around $13.30. NTRI may only make it back to the $15-ish area (the middle of a recent trading range) before finding the next round of buyers, but if it slides to $13.30 we'd view it as a very strong buy.
If you'd like to know of any changes in our opinion of CHTT, IGC, WYY, and NTRI (or if we officially recommend them as trades), be sure to sign up for our free newsletter today. It's delivered 2 to 3 times per week.
