Keeping Watch on These Two

 | Jul 14, 2014 | 12:29 PM EDT
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All the doom and gloom from last week brought bears out of hibernation.

There were plenty of I-told-you-sos and victory laps with equities only a few ticks from all-time highs. This morning we are back to crickets. Furthermore, gold has become a head scratcher with the big gap lower this morning. The chart is such a mess I really don't want to look at it for another day or two. I still hear lots of chatter about the inflation trade, but it is another brain buster. The macro thesis may align with the numbers, but the market simply does not care. Sure, we have times where it looks like that macro theme is going to take over, but then after a few days of trading we revert back to a day like today. So, what can you do? Simply don't overcommit.

Macro themes, despite the boasting of some in the media, have simply not played out to this point. Heck, they haven't even really gotten started. Stick with the individual names for now and see how earnings start to play out this week. We have plenty of big names.

It's summer, so I wasn't heavy into charts this weekend. We had the World Cup and some very nice weather roll through the area, so I did more of a Saturday morning glance than a full review of the world.

A few charts did catch my eye, with NutriSystem (NTRI) and PVH (PVH) near the top.

NTRI sports a huge short interest. Of course, this is a company in the business of fighting the idea of huge, but in people rather than price. Since a strong May report, NTRI has been consolidating in a very wide range, but now looks to be breaking out to the upside. The irony continues here as competitor Weight Watchers (WTW) looks like it is ready to break down much lower right now. NTRI needs to close higher than $17.75. A close higher than this price leaves price above a wedge pattern, although we have been fading from an initial push this morning. The RSI shows a strong breakout momentum. Unfortunately, due to the large gap up in early May, the MFI isn't really a useful measure for a few more weeks. I have absolutely no desire to buy this one today without seeing how NTRI closes. I would not want to be caught in a false breakout, but this one is certainly worth watching as a move into the $20s could come quickly if we hold today.


NutriSystems (NTRI)


On the flip side, PVH looks like a very risky buy here. In fact, this looks to be setting up as a possible short. Price broke below support on Friday, then today was rejected at price support, which is now resistance. As long as PVH is under $114.25, I would not want to be long. Yes, there are some minor bullish divergences in the momentum measures, but, again, these are a bit skewed due to the huge June gap lower. Even the MFI is losing the uptrend divergence. So, where could PVH go? The weekly chart may offer the best target.


PVH (PVH) -- Daily


Flipping over to the weekly chart, there is an open gap left from late 2012. PVH looks like it is headed to $105 minimally, but a gap fill to $97 seems more likely. Again, we see RSI making a new low and short-term moving averages crossing below the longer-term weekly moving averages. PVH does have some price support at $112 on the weekly chart, so holding off on a short until $111.50 is seen makes sense here. Neither PVH nor NTRI seem far off from a trigger into a position, so I am keeping these two on a tight watch.


PVH (PVH) -- Weekly


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