Candidates to Watch
ATK - Alliant Technologies $97.69 -1.81
WHY WE LIKE IT: This aerospace/defense stock has been flying as high as the rockets it builds. However, for the last month and a half, it has been moving sideways, building a base for what we hope will be the next leg higher. Over the past two weeks, volume has been building as the stock moves higher and just yesterday, the MACD issued a buy signal. Alliant has its hands in many aspects of the defense business and is therefore relatively recession proof.
POTENTIAL TRIGGER EVENT: A close above ATK's pivot point of $102 on volume of at least 200,000 shares will prompt us to move ATK over to our Current Play list.
THURSDAY'S UPDATE: Our new Watch List stock took a dive on heavy volume today. However, we are hoping that ATK finds support at around $97.50, as its 5, 10 and 20-dmas all converge at this level. We will be watching for volume to remain on the high side as ATK edges higher towards our trigger of $102.
MRCY - Mercury Computer Systems $49.95 -1.35
WHY WE LIKE IT: This provider of digital signal processors to the medical and defense industries has been basing between $45-$55 for the last month and a half. With the stock now resting above both its 20 and 10-dmas, we believe it is ready for another shot at breaking resistance at $55. In addition, OBV has turned around, which could be a sign that buyers are again supporting the stock.
POTENTIAL TRIGGER EVENT: If MRCY can close over $55 on volume of at least 250,000 shares, we will move the stock over to our Current Play list.
THURSDAY'S UPDATE: MRCY has been hit hard by the recent tech meltdown. However, the stock found good trend line support at $47.20 and we remain encouraged that MRCY can move higher. We will be watching to make sure that the 5, 10 and 20-dmas do not turn into resistance for MRCY. If they do, we will be forced to jettison the computer stock from the Watch List.
Momentum Stocks to Watch
AZPN - Aspen Technology $22.78 -3.28
WHY WE LIKE IT: This provider of eBusiness solutions is set to benefit from a ramp up in production, should the economy turn. This is because they specialize in integrating everything from a company's manufacturing capabilities to their supply chain. We like the way AZPN has traced an inverse head and shoulders formation. While the stock has been in a prolonged downtrend, it is showing signs of putting in a bottom.
POTENTIAL TRIGGER EVENT: All AZPN has to do is close above its neckline at $27.60 on volume of at least 550,000 shares and it will become a fixture on our Current Play list.
THURSDAY'S UPDATE: AZPN was hit hard today and has suffered too much technical damage for a turnaround to be feasible at this point. Therefore AZPN will be dropped from the Watch List this weekend.
MCD - McDonalds Corporation $29.96 -0.04
WHY WE LIKE IT: If investors are truly going back to the basics, how much more basic can you get than burgers and fries? Although MCD has had its recent problems (mad cow, etc), we like the resurgence that MCD has experienced over the last month. In addition, MCD has been tracing an ascending triangle and is fast approaching its pivot point at $30.80.
POTENTIAL TRIGGER EVENT: If MCD can close above $30.80 on volume of at least 5 million shares, we will move MCD to our Current Play list.
THURSDAY'S UPDATE: Our new Watch List play held on nicely on Thursday, considering all the red ink on Wall Street and within the DOW. MCD is a DOW stock, but went its own way in losing only $0.04 on the day. Going forward, we will watch for support at the 10-dma of $29.70 to hold up and for the recent up trend (since 6/5) to remain in tact. One more good up day will trigger a buy signal in the stock's MACD.
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