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Bullish Play Updates Sunday, May 23th, 2004

Magal Security - MAGS - cls: 15.28 chng: +1.51 stop: 13.25*new*

Now that's more like it! Whether due to actual demand for the stock or option expiration antics, MAGS made a strong upward move on Friday, tacking on nearly 11% on strong volume. Dialing down to the hourly chart, we can see that the early move pushed the stock through the top of its neutral wedge pattern, which was good for suggesting it was time for momentum entries. MAGS spent the balance of the session drifting lower along the top of that broken wedge line and then the buyers took control in the final hour, succeeding in putting in a strong finish. This wedge breakout looks very encouraging, but there are still a couple obstacles in the way of a strong rally. First up are the intraday highs just under $16 and then the May 5th high of $16.60. Another strong performance should see both of those potential resistance levels broken and will have us then turning our attention to a run at $18 and then the 50-dma just over $19. Throughout last week, there was a floor in the stock near the $13.40 level, so we're going to get a bit more aggressive with our stop, raising it to $13.25 this weekend. A drop through that level would take out the lower boundary of the now-broken wedge and would be a very bearish sign.


Picked on May 5th at        $15.04
Change since picked          +0.24
Earnings Date              4/28/04 (confirmed)
Average Daily Volume =    2.52 mln

Link to Current Quote MAGS




Verisign Inc. - VRSN - cls: 17.75 chng: +0.09 stop: 17.00*new*

Although it has made some serious attempts at a breakout, VRSN hasn't been able to sustain any of those bullish attempts. The long upper weeks on several of the recent daily candles suggests that there's little bullish conviction, while the fact that VRSN is holding above the 20-dma ($17.47) and the rising month-long trendline suggests no urge to sell. We'll need to see a break of the current consolidation range to know which way the stock is likely to move next. As we've noted in the past week, support is strong now in the vicinity of $17.50 and we're still in favor of buying rebounds from this support area. It is really no great surprise that VRSN gravitated towards this strong support level on Friday, as the usual options expiration antics played out. While nowhere near oversold territory, the daily Stochastics are hinting at a bullish short-cycle reversal, and we should get that verdict early next week. With the risk of VRSN breaking its recent bullish trend, we're tightening our stop to $17.10 this weekend, which is well below current support and would represent a break of the 30-dma ($17.10). Conservative traders may want to consider exits on another failure near the $19 level, while the more aggressive strategy will have us holding on for a run up to the $20 resistance level.


Picked on May 5th at        $17.40
Change since picked          +0.35
Earnings Date              4/22/04 (confirmed)
Average Daily Volume =    2.47 mln

Link to Current Quote VRSN



 

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