Stock Trading Predictions & Technical Analysis: SUN

Monday, January 4, 2010

SUN - Cup and Handle Formation

SUN - BUY SIGNAL

SUN has given us a BUY SIGNAL today with a breakout above its 200 day MA and slightly above its 50 day MA. SUN broke strongly above its resistance level around $26.65, which if SUN manages to stay above will become its new support level. Within the stochastic we can observe what appears to be a cup and handle formation.

For those who are not familiar with the cup and handle formation, here is an example:

Just like in the picture which you can compare with the stochastic, the chart looks like a cup with a handle. After a small pullback (handle), the cup and handle formation is confirmed after a strong move up. Today we appear to have a confirmation of this pattern within the stochastic. It would however, be safer to wait and see if SUN manaages to stay above the 200 day MA tomorrow (above $26.65). In the event where SUN simply continues higher tomorrow, it will be considered safe to take a position with SUN. If SUN pulls back tomorrow but manages to stay above the 200 day MA, I would still wait until the next day for a move back up to confirm the support level.

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TECHNICAL INDICATORS

BUY SIGNAL: Indicates the possibility of the start of a new up trend or the continuation of the current up trend. This signal may be often given in the early stages of a potential new up trend that was preceded by a down or sideways trend. Such signals do not always succeed and may fail at time.

BUY: Indicates that the current up trend is already in motion and a BUY SIGNAL was already given earlier. A BUY does not necessarily indicate that the stock will continue higher from here, but simply that the stock is trending up. The further into the trend you decide to take a long position, the more risk you have of seeing it reverse back down sooner rather than later.

STRONG BUY SIGNAL: Indicates a stronger, more significant and reliable signal than a BUY SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG BUY: Indicates that the current up trend is already in motion and that STRONG BUY SIGNAL was already given.

SELL SIGNAL: Indicates the possibility of the start of a new down trend or the continuation of the current down trend. This signal may be often given in the early stages of a potential new down trend that was preceded by an up or sideways trend. Such signals do not always succeed and may fail at time.

SELL: Indicates that the current down trend is already in motion and a SELL SIGNAL was already given earlier. A SELL does not necessarily indicate that the stock will continue lower from here, but simply that the stock is trending down. The further into the trend you decide to sell a position, the more risk you have of seeing it reverse back up.

STRONG SELL SIGNAL: Indicates a stronger, more significant and reliable signal than a SELL SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG SELL: Indicates that the current down trend is already in motion and that STRONG SELL SIGNAL was already given.

HOLD: Indicates that traders who already hold this stock, should hold on as long as the trend persists. This signal is usually given during an up trend for which it would be considered too risky to take a long position at this point.

STRONG HOLD: Indicates that the current trend has been in motion for a while and rarely deviated away from the trend. Although the stock may continue higher, there may not be enough potential up side to trigger a BUY SIGNAL. This type of indicator usually means that the stock has very strong support levels which may have been tested but not broken.

WAIT: Usually given during a sideways trend for which we are waiting for a move that would trigger a BUY SIGNAL or SELL SIGNAL. This could also indicate uncertainty and the risk that would be taken if you were to take a long position at the current level. Taking a long position after giving a WAIT indicator is considered a gamble.