Aug 27, 2010 10:04 AM PDT
There's not much need to mention that Delta Petroleum Corp. (DPTR) made a breakout move last week - it's obvious. The question is whether or not it will stick.
Our thoughts on this stock actually extend back to August 7th, when DPTR was named as one of the prior day's most popular stocks in terms of big, net purchases. The odd part was that Delta Petroleum shares didn't jump, nor was volume all that great - we simply saw a handful of big buy transactions following what was - frankly - not so great earnings news.
In retrospect, we should have kept a closer eye on the stock.
In any case, yes, DPTR just cleared a major resistance line, and could (should) move higher with greater ease now that it has. However, given the size of the pop, it would be best to wait for a retreat/regroup just to make sure the move to a peak of $3.47 isn't just the result of volatility.
If and when Delta Petroleum Corp. shares start the second wave of buying, don't be surprised if they make their way all the way back to $11.44. That's a major retracement level.
Be leery of any unusual strength from S2C Global Systems Inc. (STWG) today - it's been heavily promoted within the last 24 hours, and may pop as a result. Either way though, STWG has drawn a couple of important lines in the sand.
The one of most interest right now is horizontal support at $0.07. That's where the modest retreat in late August turned into a regrouping of the bulls before S2C Global Systems shares made their second trip back up to $0.13. You'll also notice $0.07 has been resistance before, making it a little more meaningful as support now.
The other big line to watch STWG? The ceiling at $0.13 has been touched - but not crossed - twice now. The only thing that would be encouraging is if the promotion managed to take the stock above $0.13.
So, there's the breakout/breakdown trading framework, though the pumping effort could make things choppy today before S2C Global Systems.
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GENova Biotherapeutics Inc. (GVBP) is another heavily promoted stock to keep a skeptical eye on, though for different reasons. In this case, the stock has already done exceedingly well of late... perhaps too well. If anything, the promoters are just pressing their luck.A couple of key technical red flags for GENova Biotherapeutics are the gap between Thursday and Friday, and the way shares started to retreat from the highs on Friday - it means investors were starting to file out of GVBP (a logical move with that much profit potential on the table).
Today's pumping effort for GENova Biotherapeutics may indeed breathe new life into the stock, but if not, watch for pullbacks to the key Fibonacci levels (at least) from GVBP. They're at $0.21 and $0.14.
Just to be clear, the oval long-term view of the Alcatel-Lucent (ALU) chart is a bullish one. In the short-term though, the stock looks overbought and ready to pull back.
To really show you the scope (and risk) of the ALU opportunity, we've plotted a weekly chart. Here's one can see shares are at the upper end of what's become a bullish trading range. We can expect a move back to the support line, currently at $2.52, but rising every day.
Still, Alcatel-Lucent seems to have bucked the nagging downtrend of 2007 and 2008, and has developed some solid bullish momentum in 2009.
As for an upside target, let's use $6.24 for the time being. That's a key Fibonacci retracement level for ALU, but also one the ceilings (and turbulence areas) the stock had trouble with before the last leg of the big downtrend last year.
If you'd like to know of any changes in our opinion of ALU, DPTR, and STWG, or GVBP (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.
