Stocks are so far on pace for another bullish day, though most of the more interesting chart setups we've come across have been of the bearish variety. Perhaps they could be used as a hedge, should things turn south quickly. In any case, charts of Hovnanian Enterprises, Inc. (NYSE:HOV), Helicos BioSciences Corp. (NASDAQ:HLCS), and MoneyGram International, Inc. (NYSE:MGI) are worth a closer inspection today.
I thought
Helicos BioSciences Corp. (NASDAQ:HLCS) might have a shot at finding support at $1.60, as it did last week. The pressure was too great though, pushing the stock under a key floor.
That level wasn't pulled out of thin air for Helicos BioSciences shares. It's the 61.8% Fibonacci retracement level for the entire July/August rally. Now that it's snapped with today's low of $1.41, HLCS is free to move back to July's lows around $0.40.
You can't quite make it out yet, but the downtrend from Helicos BioSciences is gathering volume. The last two days have been heavier-than-average distribution days. That doesn't help.
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Just to be clear, though I know the residential housing construction market is picking up, I still see way too much capacity. The rest of the market obviously doesn't agree, which is why stocks like
Hovnanian Enterprises, Inc. (NYSE:HOV) have been doing well of late.
Nevertheless, a trend is a trend, and as it stands right now, like Hovnanian Enterprises shares are doing their best to sustain a bullish trend that's been in place since February. I believe the next leg of that trend is predicated on HOV breaking above a recent resistance line that, with the help of a rising support line, has formed a wedge shape... a shape that could squeeze the daylights out of the chart and catapult Hovnanian upward.
Like I said, this has nothing to do with valuation - I think Hovnanian Enterprises is overvalued as it is. This is about a swing trade; HOV is simply setting up what could be a good short-tern move, as long as resistance at $4.46 can be cracked.
And finally,
MoneyGram International, Inc. (NYSE:MGI) is on the verge of serious trouble..... the price a stock pays for getting overextended over the span of several months.
The pullback from $3.44 to $2.61 could just be the beginning for MoneyGram International. I suspect part of the reason the bleeding stopped this week was simply because MGI was approaching 38.2% retracement level at $2.43. The stock's hardly bounded off that floor though. In fact, the MoneyGram is pointed that direction again today, less than 20 cents above it.
If $2.43 breaks as support, the next big support level for MoneyGram International shares is $1.81. First things first though... $2.43 is still in the game.
If you'd like to know of any changes in our opinion of HOV, HLCS, or MGI (or if we officially recommend them as trades), be sure to sign up for our free newsletter today. It's delivered weekly.
