At ChartSmarter we have an affinity for the round numbers. And for good reason. They can act as both support and resistance and should be watched closely. Recently we have seen instances with MELI off 90, TSCO off 80, JACK off 70, TIF off 60, IMPV off 50. I could go on and on but i think you get the picture. All round numbers play a part but to us over the years we like the “very round” numbers like par, 90 (as stocks that trade through that figure often reach par and beyond), 50 and 20 (as stocks lose their teenager status). Below are 3 examples of names from our Thursday 1/21 Game Plan and exactly how they were presented.
SIRO between 1/11-20 flirted with the round par figure, but most importantly recorded no CLOSES below it. The leading dental play is lower by just 3% in ’16 and is now just above its prior cup with handle trigger of 105.46, a positive development. The stock is now 5% above the highlighted trigger and at an interesting crossroad as we predicted this may now play out as the right clavicle in a bearish head and shoulders pattern near all time highs here.
Stocks that can be bought at the round numbers are SIRO CDK MSFT. SIRO is a dental play whose group has been strong, but has succumbed to the overall market weakness. It is lower by 7% YTD and higher by 13% over last one year period and is 10% off recent all time highs. Earnings were unimpressive last year with a scant gain of .2% on 11/20 and losses of .6, 1.5 and 3.4% on 8/7, 5/8 and 2/6. SIRO did take out a cup with handle trigger of 105.46 on 10/22 rising 3.8% on weak trade, and not surprisingly is back below it. That breakout trigger is key to watch as it could form the right shoulder on a bearish head and shoulders formation. It has held the round par number the last couple weeks and enter on a pullback toward it at 101. A break ABOVE a head and shoulders could be powerful.