(By Rich Bieglmeier) Stocks should continue higher as the S&P and Dow have wiggled higher than last Friday's close. The NASDAQ will make it three for three if Wednesday is another green day. If we are right, sometime in the next week or so, the markets should be challenging the highs achieved in early June.
Earnings, of course, could derail everything, but the charts say more gains are on the way. The indexes made gains early in the day on hope of more Federal Reserve stimuli and then sank when Ben Bernanke said not so fast, despite pleas from New York Senator Chuck Schumer to "get to work."
For now, the equity markets remain in their uptrend, which is the bull's best friend.
If stocks plan on going higher, then our readers probably want to know which ones are ready to roll. We ran our nightly screens looking for companies that meet our breakout criteria, volume characteristics and could be ready to pop.
Additionally, we've provided stop loss suggestions for each idea, in case we are wrong, no egos allowed.
We found 20 stocks that could be excellent short-term trade opportunities.
Apache Corp. (APA) Suggested Stop: $84
Charles River Laboratories International, Inc. (CRL) Suggested Stop: $37
Scholastic Corporation (SCHL) Suggested Stop: $27.50
Cimarex Energy Co. (XEC) Suggested Stop: $53
Zebra Technologies Corp. (ZBRA) Suggested Stop: $34
Abbott Laboratories (ABT) Suggested Stop: $62.73
Baxter International Inc. (BAX) Suggested Stop: $54
Buckeye Technologies Inc. (BKI) Suggested Stop: $29
Boston Properties Inc. (BXP) Suggested Stop: $109
Cracker Barrel Old Country Store, Inc. (CBRL) Suggested Stop: $62.51
The Clorox Company (CLX) Suggested Stop: $72.50
Walt Disney Co. (DIS) Suggested Stop: $47.40
Liberty Global Inc. (LBTYA) Suggested Stop: $50.26
The Mosaic Company (MOS) Suggested Stop: $56
National Fuel Gas Co. (NFG) Suggested Stop: $46.45
Schlumberger Limited (SLB) Suggested Stop: $65.21
Trustmark Corporation (TRMK) Suggested Stop: $25.28
Time Warner Cable Inc. (TWC) Suggested Stop: $82.32
U.S. Bancorp (USB) Suggested Stop: $32.29
Verisk Analytics, Inc. (VRSK) Suggested Stop: $49.86
Of course, short-term trading involves a lot of risk. iStock suggests using the difference between your entry price and your stop price to limit losses to 1% of your portfolio's value. For example, if you have $25,000 in your trading account, then you might consider holding your losses to $250 or less.
It works like this. Let's say you buy Verisk Analytics, Inc. (VRSK) at $51 and use our suggested stop of $49.86. The difference between 51 and 49.86 is $1.14 per share. Now take the $250 max loss and divide it by $1.14 and that rounds up to 220 shares of VRSK.
If the trade moves in the right direction, we tend to add approximately 70% of the day's gains and adjust our stop – a $1 gain on day one and our stop would be $50.56 on day two. If the stock drops on day two, or any day for that matter, the stop remains unchanged.
Using this simple stop loss strategy allows you to ride the winners and cut losses short – just the way it is supposed to be done. Oh, and take it from us, no matter how high the stock goes, don't try to pick the high, keep on raising those stops. Thinking it can't go any higher or lower than this is a mortal trading sin.