Shares of Restoration Hardware (RH) have fallen from a recent high of $80.00 all the way down to near $51.00 I have a major trade level of support at $50.00 and it also happens to be a 75% Fibonacci retrace level. This gives major credence to this level as a bounce point and bullish swing trade. I think it is also important to understand that the stock has not fallen on bad news, but more profit taking. That is a big distinction and why I will be looking to buy Restoration Hardware at $50.00.
Last week, market volatility surged higher as the major stock indexes sold off. The catalyst for the surge in volatility was due to increased tension between the U.S. and North Korea. Now that the so-called geopolitical tension has subsided near term the CBOE Volatility Index(INDEXCBOE:VIX) has declined by nearly 6.0 points from last week’s high of 17.28. Is there a support level where traders should look for a bounce in the $VIX? At this time, the major daily chart support level in the $VIX should be around the 10.96 level. Please note, this chart level is a major retrace area from the high and also a spot where the 20 and 50-day moving averages are on the daily chart. This is a level where I will be looking to get involved on a move back higher in volatility.
Shares of Teva Pharmaceutical Industries Ltd (NYSE:TEVA) have finally put in a near-term low. The stock is jumping over 3.5%, but more importantly, broke-out of a bullish inverse head and shoulder pattern. The breakout signals further upside. I have a penciled target in of $20.35. Teva Pharmaceutical Industries has fallen sharply of late, dropping from near $33.00 to $17 in the last few weeks. The bounce I expect is only a near-term move, over the next month or so. Once the upside target is achieved, exit and look to buy the pull back.
Today, leading sporting goods retailer Dick’s Sporting Goods, Inc.(NYSE:DKS) is plunging lower by more than 20.0 percent. The catalyst for the decline in the sporting good giant is simply a lackluster earnings report that was released before the opening bell this morning. Traders should note that the next major technical chart support level for DKS stock price will be around the $22.60 area. This spot on the chart is going to be the major retrace level where the institutional traders should defend the equity. Unfortunately for DKS stock this support level is still another $5.00 lower than its current share price which is $28.84.
Retail has been ugly. Stocks like J.C. Penney (JCP) that were already trading at multi-year lows fell sharply on earnings. In comes Wal-Mart Stores Inc (NYSE:WMT), trading near 52 weeks highs and reporting Thursday. Is Wal-Mart Stores Inc different? The bottom line is this. At 52 week highs, Wal-Mart Stores poses a ton of risk for an investor holding into earnings. They somehow must have a stellar retail quarter, avoiding all the havoc that every other retail company is facing. In addition, there is a trend line on the daily stock chart that shows Wal-Mart is into major resistance. This adds credence to being extremely careful and even bearish on Wal-Mart Stores going into earnings.