Change text size

• Email This Article
• Print This Article
• Digg This
• Delicious
• Subscribe

After a couple of out-the-gate headline attempts aimed at spooking bulls to “schnitzel a little,” it was back to business. By day’s end, investors improved upon Tuesday’s solid confirmation of the market’s nascent bull. With leadership provided by the tech-heavy NASDAQ, this week’s article will highlight one highly ranked component and one “might as well be inducted” tech issue, as each appears technically ready to handle any further, less-mad money efforts in the weeks ahead.

First up on the radar of stocks handling the market in classic form is a weekly base in Stericycle (SRCL). Readers may not be familiar with Stericycle as the NASDAQ100 component doesn’t typically receive the airplay of its consumer-friendly gadget and gizmo brethren. However, Stericycle’s business of providing medical waste management solutions has been a healthy one. In fact, the company does sport decent year-over-year earnings growth topping 86% of listed US stocks. And away from the cameras of CNBC, that action hasn’t gone unnoticed by investors doing their homework.  

Below, we’re looking at a seven month weekly chart of Stericycle. During that time, a high-level double bottom or “W” pattern has emerged. The most recent action has carved out a handle that’s been finding support at the mid-pivot of the “W. As the basing action also broke below the prior ascending base lows built in late 2007 / early 2008 (not shown), the technical action is considered a first-level base and a healthier situation than if it were a late stage base.

Figure 1: Stericycle (SRCL) Weekly “W” Baser

The second selected stock, “drum roll please”… is SAP Ag (SAP). Maybe traders thought the non-Nazzie, but tech heavyweight in question was going to be “Big Blue” or IBM (IBM). That stock in fact, does appear poised for some “Big Green,” much like the title from last night’s Option Watch. However, that handle structure is actually more a “high” handle or perhaps a three-week’s flat base within a larger base-on-base weekly structure. Not that there’s anything wrong with that, its very strong 88 EPS rating or other fun facts per the likes of Investors Business Daily.

Figure 2: SAP Ag (SAP) Weekly Cup with Handle

That being said, SAP (shown above) was highlighted for tonight’s piece as the German-based business application software giant has been making all the right moves of late. Recently and behind the late July price jump and current “second” handle development, the company beat profit estimates by two cents and showed surprise stateside strength. Per IBD, SAP’s EPS rating is still a tad soft at 71. However, following a round of cautious upgrades, there are still but two of ten analysts covering SAP that have “Buy” ratings on the stock. Optimistically, there’s room for bullish analyst improvement should SAP continue to improve upon its latest quarterly results.

Further, aside from sporting the classic cup with handle base shown above, there’s been very heavy back month call activity, particularly in the December 60’s. I’ve covered much of that trading action in two articles at investors.com this past week for readers interested in more details. The jest of the pieces is the contracts represent large synthetic straddle positioning. And while that would mean this particular trader is more of a volatility bull and not placing a strict directional bet for higher prices: that’s certainly one way to handle both bear raids and raging bulls in a typically mad money market.  


Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler’s Forum
 
The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual. 

• Email This Article
• Print This Article
• Digg This
• Delicious
• Subscribe

Recent Articles by Chris Tyler, Optionetics.com

• November 20, 2008
  Growth Stock Swing Option: Nov 20, 2008
• November 20, 2008
  Midday Action: November 20
• November 19, 2008
  Hot Shots: "Sell-e-brate Dow 8K?"
• November 19, 2008
  Midday Action: November 19
• November 18, 2008
  Option Watch: Nov 18 - Fizzling Option Forecast?