There are a myriad strategies one can look at when trading stocks. For myself I try to keep things as simple as possible, with a strong emphasis on the candlesticks. If I can combine them with other “clusters of evidence”, meaning signals that align near the same junction with them, the alert has even more success potential. One that I like to employ is the round number theory whether on the long or short side. Below are just a few examples of this and many are still playable today.
In our Wednesday 10/26 Game Plan we looked at MSFT. This name is a best of breed tech play, whose sector has been on the move higher. If one is going to play on the long side in this environment make sure it is a dominant name. Softie is now just 2% below all time highs and has CLOSED the last 5 sessions near lows for the session, but risk/reward here is still to the long side in my opinion. Below is how it was looked at precisely on 10/26.
Stocks that can be bought near the round numbers are MSFT. MSFT is a software giant higher by 10% YTD and 15% over the last one year period and sports a nice dividend yield of 2.6%. Earnings have been respectable with gains 4 of the last 5 times by 4.2, 5.3, 5.8 and 10.1% on 10/21, 7/20, 1/29 and 10/23/15 and a drop of 7.2% on 4/22. The stock is higher 5 of the last 6 weeks and the one down week ending 10/14 CLOSED in the upper half of the weekly range (the weeks ending 9/16-10/14 all CLOSED within just .55 of each other). It has taken out 2 valid base triggers of 58.80 (cup) and 53.10 (double bottom) on 10/21 and 7/12 and has acted well POST breakout. MSFT has recently taken out the round 60 number which was resistance dating way back to December ’99 with an intra month high of 59.97. Enter on a pullback to the round number at 60.40.