Stay Ready for Entries on P&G, Scorpio (original) (raw)

Here we look at ways to get in on pullbacks within trends of these two names.

In this market there are so many stocks that have extended on the upside recently that it can be hard to find an entry with an edge.

Rather than buying new highs, I wait, however, for pullbacks within a trend. So I searched for some stocks that have been pulling back and I did find a few setups that look pretty interesting. Let's take a look at the first pick: Procter & Gamble (PG) .

This stock has recently seen a healthy pullback, and so far it seems to be terminating the recent decline after holding on top of a Fibonacci price cluster of support at the 121.39to121.39 to 121.39to121.89 area on Jan. 3. If price continues to hold above the recent zone, my initial upside target comes in at the 127.89area,then127.89 area, then 127.89area,then129.53 and target No. 3 comes in at $134.27.

Not only did we have price support that held at the low, we also had a cluster of Fibonacci time cycles kick in on a retest of this low. Since this low was made, we did see a buy trigger that tells us it's OK to place a bullish bet against the recent low. This is illustrated on the 30-minute chart below.

The trigger is the combination of an 8/34 Exponential Moving Average crossover to the upside, along with a pattern shift.

The pattern shift is when you go from a pattern of lower lows and highs to a pattern of higher highs and lows. When we took out the prior swing high at $122.78 and also had the crossover, that indicated a buy entry. Typically I look at an options entry. More often than not, I'll do a bullish vertical spread. If the options are inexpensive, enough, I might look at outright calls. At this point, my initial risk is below the Jan. 3 low made at time and price parameters. I'm wrong on this setup if that area is violated.

How to Move on STNG Without Getting Stung

Let's take a look at Scorpio Tankers Inc. (STNG) next. In this case, we do not have a buy trigger yet, but I want to stalk it for one. The overall pattern in this name is also a bullish pattern of higher highs and lows. I have three standout areas I'm going to watch for possible support. They come in at 34.05to34.05 to 34.05to34.18; 33.00to33.00 to 33.00to33.45 and then 31.92to31.92 to 31.92to32.10. If price can hold above one of these key zones, and it then triggers on the buy side on a 15- or 30-minute chart, I will look at a buy entry.

If you look at the 15-minute chart of STNG, you can see that there is no buy trigger yet, as we have not shifted the pattern of lower lows and highs just yet, and there is no 8/34 EMA crossover to the upside. If I see a crossover, I'll look at entering the buy side. I can estimate an initial upside target area at $41.90, but the actual target will be calculated from whatever low is made into the zone (if you need help with triggers, watch my videos here and here).

What we need to see on the 15-minute chart, is the 8/34 EMA crossover, and we also need to see it take out a prior swing high. At this point, $35.98 is the most recent swing high, but a lower one may develop. If I don't see a buy trigger, I'll stand aside on that name.

At the time of publication, Boroden had no position in the securities mentioned.