Monday, April 28, 2014

US Stock Market Update and Trading Ideas: SouFun (SFUN) and Smith and Wesson (SWHC)

Traders heads are spinning. What started off as a promising day, quickly turned into a major reversal and potential distribution day, only to reverse and close near the highs of the day in heavy, above average volume. 

Leading growth stocks seemed headed for another disastrous day in heavy volume but managed to close off the lows. Most are still within their consolidations trying to turn higher, but few have managed to do so. Western Refining (WNR) broke out and Smith and Wesson (SWHC) is on the verge of breaking out of cup and handle bases.

This could be an interesting week. With leading growth stocks failing to completely breakdown and three potentially major market moving headlines, on Wednesday, Fed Meeting announcement, Thursday, Janet Yellen speaks, and Friday's Monthly Unemployment report, the market and leading growth stocks could tighten and attempt to rally. Not time to go fishing yet!!


Soufun Holdings (SFUN) is bouncing off the two hundred day moving average for the second time in two weeks. The stock is in the process of rounding the bottom of a cup shaped base. Price and volume have been fairly orderly considering this would be a third stage consolidation. The stock could be entered as it tries to bounce back through the two hundred day moving average with a stop below the consolidation lows.

Smith and Wesson (SWHC) is just shy of breaking out a cup and handle base. The stock is up over 500% since the end of 2011 and this would be a late stage consolidation more prone to failure. A breakout above $15.10 could launch the stock towards its pe expansion target of between $17 and $20.

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