Odds Up for a Chevron Rally

 | Apr 30, 2012 | 10:30 AM EDT
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In investing, you've got to take the losers with the winners, and two of my previous setups provide a fitting example: One is doing well so far, while the other -- well, not so much. The trick, of course, is making sure the winning setups outrun any losses you incur on less successful trades.

Before we get into that, though, let's go over a new play in Chevron (CVX). I had a recent setup in this stock -- and it was "torn between two clusters" until this past week, when it cleared an important hurdle of resistance. That increased the odds for a continued rally from the $99.31-to-$100.71 price cluster zone.

Chevron (CVX) -- Daily
Source: Dynamic Trader

Since the bulls just won this last round, I am now setting up a pullback back to the April 12 low for a possible entry, keeping the $115.48 target in mind. It is now a safer bet on the buy side. If I run my Fibonacci retracements and projections, the $102.91-to-$103.85 area is what stands out as a possible buy zone comes. If the price pulls back into that general area, I want to be a buyer, with my maximum risk defined below the $100.51 swing low. Just note that, if we take out the April 27 high, the support decision will need to be recalculated.

Update: TIF

In this more positive update, Tiffany (TIF) -- highlighted in this video and this prior article -- has continued to hold above the key price support cluster. The stock has also cleared an important hurdle on the upside.

Tiffany (TIF) -- Daily
Source: Dynamic Trader

As long as the price continues to hold above the April 10 low, the initial upside target comes in at the $76.56 area.

Update: BIDU

But, again, not every trade is destined to be a winner. Taking a look back at my prior setup in Baidu (BIDU), this one was stopped out with a loss after the gap down last Monday. I don't feel terribly bad about it, though, because this was a good setup. I followed all the rules and made sure certain criteria were met. It just did not play out.

Baidu (BIDU) -- Daily
Source: Dynamic Trader

At this point I'm watching two different zones in Baidu. The first is the next key price support cluster illustrated on the chart, between $127.29 and $128.40 area. So far the recent low was made just above this key decision, at $128.94. I'm also watching what I call symmetry projections for a possible failure on the way up. These levels come in at $137.29 to $138.28.

I don't personally have a new position in Baidu yet, but I am considering using the resistance cluster for a possible short if the stock tests that area and then triggers a short entry. I'm looking at that sort of position since there was a bearish moving average crossover on the daily chart to the downside, and Baidu is are also below the 50-day simple moving average. If a sale is triggered, my risk will be defined just above this resistance decision (again, $137.29 to $138.28).

If price just clears this zone instead with no trigger, I would be happy to stand aside and let Baidu rally for those who may have taken an entry against the key support instead.  Remember, before entering a trade, know what your risk is!


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