It was what I call a good consolidation day on Tuesday. The market had an orderly retrace and came back at the end of the day closing mixed. The blue chips were stronger than Nasdaq, for sure. A lot of that may have been due to the biotech index, which was down more than 3% on Tuesday, although it did recover nicely. Let’s take a look at some of the stocks that dominated the market.
Calithera Biosciences, Inc. (CALA), which we put a swing trade out on Tuesday, was up 25 cents to 7.09, or 3.65%, on 687,000 shares traded. It has gone all the way from 30.00 down to 4.00 in multiple waves down, and looks like it formed a base. It’s above where the moving averages crossed over, above the prior high, and the next resistance level appears to be around 8.00. That can happen in the next day or so, as well as 8 3/4 at the declining topsline. It’s important that the short-term declining topsline is taken out. Volume is increasing. It’s not huge, but it has gotten higher four consecutive days. If it can hold the 6 3/4 range, then look for it to head up into those zones.
Chesapeake Energy Corporation (CHK) is a good energy stock. It came way down from the mid-30’s, and as recently as 31 last year, and took it all the way down to 6.00. In ensuing weeks it formed a left shoulder-head-right shoulder, and on Tuesday, it jumped 56 cents to 8.98, or 6.65%, on 24 million shares. That’s the biggest volume on an up-day in about two weeks. If it can break through 8.98, expect it to test the 10 1/2 area. If it gets through that, look for it to test the 11 3/4 area, and eventually 14, depending on the oil market.
ConocoPhillips (COP) ran another 2.16 to 55.14, or 4%, on 15.4 million shares on Tuesday. It is ready to move and looks intriguing. It spiked down, spiked up on heavier volume, and then there was a pullback on lower volume, with a breakout as the moving averages crossed over. The ideal scenario is, after running up through a couple layers of resistance, and after running up for six days in a row, it may see 7 or 8 days in a row and make it up to 60. But what I prefer is a pullback consolidation in that 55.14 zone, set up a flag, and then run to 60 at that point. If it does that, then it may very well get a swing trade from like 53-4 all the way up to 60-1.
Encana Corporation (ECA), an oil company that is doing well, was up another 57 cents to 8.15, or 7.5%, on 19 million shares. It has dropped from the 36 range to the 5 range. The recent pattern is of a V-bottom, followed by an extended right-handed V, almost like a higher W, up 6 days in a row, 6 days of good volume, and on Tuesday it got up over the prior high and closed at the gap. It would not be shocking to see this stock get to 8 3/4-9 as early as Wednesday. If it gets a breakout, look for that entry opportunity.
Other stocks on the long side include Alcoa Inc. (AA), Autobytel Inc. (ABTL), Arch Coal Inc. (ACI), Bonanza Creek Energy, Inc. (BCEI), ProShares UltraShort Nasdaq Biotech (BIS), Can-Fite BioPharma Ltd. (CANF), Chesapeake Energy Corporation (CHK), Flotek Industries Inc. (FTK), Juno Therapeutics Inc. (JUNO), Matador Resources Company (MTDR), Oasis Petroleum Inc. (OAS), Tronox Limited (TROX), ProShares Ultra Bloomberg Crude Oil (UCO), and Whiting Petroleum Corp. (WLL).