Read Larry Connors' blog – Short Term Trading Strategies
Today I’m going to talk about Westport Innovations Inc. (WPRT), a new stock we’ve been following, and one that we added to our model portfolio today because of the set up. Stepping back a bit, you’ll see on the chart that the company started trading on Nasdaq 100 in August of last year, got up to about 13.50 then rolled over in Oct-Nov when the market did. It got down to 3.00, retested there twice and then built a nice base over the course of the six-seven month period until June when it broke out on a volume surge, formed a little flag, then ran up to the high point for the next month or so. It made a nominal new high in mid July on low volume and did not follow through, then it rolled over and retested the trendline and support, holding that nicely.
About a week ago it popped on news, ran from about 7.35 to about 10.76 in two days, but over the course of the last four days it formed a beautiful textbook pennant with low volume each day and yet technicals holding up rather well.
It looks like this is a stock that wants to go to the top of the channel up around 13.50-14.00 zone. I’m going to set a 13.50 target on it. The short-term support would be at the bottom of the trading range in the gap at around 9.30-9.35, which is where the 21-day moving average is coming in. I would like to see that area not retested and make a move that takes it up above the 10.75 area, then runs up to about the 13.50-14.00 zone. Moving average support beneath that, at both the 21 to 40-day moving average, is around the 8.50 zone, thereabouts, so that would be support, which if violated I would look to exit.
In any case, that’s it for our Chart of the Day today and we’ll talk to you tomorrow.
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