Stock Setups

United Technologies Inc. UTX, is at an important juncture and is a great example of a stock moving back down to meet an uptrend line.  It is at this moment that UTX must make a decision to either continue the uptrend it was previously in, or bust below trend and violate the previous up trend.

UTX is a DJIA stock and so usually moves with the index.

UTX breaking into the green shaded area is going to be a promising sign for the stock although I doubt that would occur on a low volume end of week day like tomorrow (Friday 5/27/2011).

Note also from the chart below that UTX is on a supportive area combined with the return back to up trend line support.  So it would seem there is some potential here for UTX to maintain the current up trend.

The three most recent candlesticks show that yesterday UTX did a bullish engulfing of the day previous to yesterday.  Today we simply see a small reversal hammer.  So they look somewhat constructive for a mini base to move higher again.

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CPST seems to have an nice larger structure and a weekly smooth trend that is somewhat reliable.  This low priced alternative energy stock has been trending up for the last 6 months in a steep up trend and has recently been consolidating in a falling wedge for the last 2 months.

It has a nice large resistance structure going back to 2005 and some nice large swing trading ranges.  CPST looks like it wants to make a challenge of the 2.5 level and possibly break through to the upside and trade into the green shaded area that would define a breakout in the chart below.

However the stock has had a reputation of collapsing after hitting this long down trend channel line since 2005.  So I think it better to assume it will fail up there, but then only give it a second chance if it shows constructive price action near the resistance channel line.

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Today I sent out a notification email to BestOnlineTrades Letter Subscribers about TSLA.  This stock looks quite good to me right now, and may be timely on both the daily and weekly time frames.  I think TSLA could evolve into a great swing trade.

Before I even get into the brief technical discussion, it seems to me that a pure play electric car company has some huge advantages the next year or two.  Yes, the other auto markers are all working on electric vehicles as well, but TSLA is a pure player in this space.

If oil sky rockets to 200 dollars a barrel ( I believe it eventually will but may take 1 to 3 years) the demand benefits to TSLA could be huge and if they are able to ramp up production to a high enough level economies of scale would kick allowing them to offer more price competitive cars.   But this auto maker seems positioned as a niche player in the high end space.  And it seems to me that everyone would like to avoid filling up at the pump, no matter what ‘class’ they belong to.

Porsche has a market cap of 80+ billion and TSLA has a market cap in the 2.6 billion range.  Seems to me like there is a lot of potential upside for this niche electric auto company especially if the oil price gets out of control. 

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