Three "Technical" Trading Opportunities

07/28/2006 12:00 am EST

Focus:

Jocelynn Drake

Financial Analyst, Schaeffer's Investment Research

Technical trading expert Jocelyn Drake of Schaeffer’s Investment Research examines how certain news events can offer quick trading opportunities in a volatile market. Her forecasts provide investors with the tools they need to add profits to their portfolios…

 

“The shares of optionsXpress Holdings (OXPS NASDAQ) have busted higher this afternoon following an upgrade from Raymond James to "strong buy" from "outperform." Technically speaking, the security broke through the 24 level, which has served as resistance since the shares gapped lower on June 14. Short sellers may also be helping to fuel today's 7% rally. As for July's report, more than eight percent of the security's float was sold short. With the stock breaking above former resistance, some of these bears may be buying back their shorted shares in an effort to stem their losses or lock in their gains.

 

“Last night, Sun Microsystems (SUNW NASDAQ) reported a quarterly loss of two cents per share (excluding items) on revenue of $3.83 billion. The Street had forecast a loss of three cents per share on sales of $3.6 billion. This surprising news has helped to lift the shares more than five percent. What's more, the shares have gained more than 12.5 percent during the past three trading sessions on growing trading volume. This steady uptrend could soon catch the attention of the momentum and technical traders. This uptrend has carried the shares above their 20-day and 10-week moving averages.

 

"Furthermore, the stock has been trapped in a narrow range during the past several years. With the stock bouncing off support in the 3.80 region, it would be looking to make another run at resistance at the 5.60 level. From today's current price, that is a rally of nearly 30%.

 

“Yankee Candle Company (YCC NYSE) is definitely making the short sellers anxious today. While the firm announced that it will acquire the Illuminations brand from Candle Acquisition for $22 million, it also announced that it hired Lehman Brothers to assist it in an analysis and consideration of potential strategic alternatives to enhance shareholder value, including a potential sale. This news has sent the share skyrocketing more than 17% higher. Adding to that fuel is that more than 9% of the security's float has been sold short. At approximately nine times the stock's average daily trading volume, this accumulation of bearish bets represents ample fuel for a solid push higher in the shares as the skeptics rush to close out their pessimistic positions.”

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