Five Double-Top-Potential Charts

 | Aug 29, 2014 | 2:21 PM EDT  | Comments
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Stock quotes in this article:

calm

,

etp

,

tap

,

navi

,

vlp

For many events in life, anticipation can be the best part. It's not the same for charts. Waiting for breakouts or breakdowns can be exhausting and frustrating, but it is what we do (at least some of us). While the waiting is the hardest part, not waiting is the most painful. So sit back and keep an eye on these Double Top Tuesday potentials.

In this group, Cal-Maine Foods (CALM) may have the most potential for a major move from a price standpoint. Double tops can come with many different underlying formations and here we get an inverse head and shoulders. A close of more than $79 triggers a bullish target of $89. There is resistance just above $81, the recent high, but this $79 mark is the key. Ideally, we'll see volume pick up on any breakout as well.

 

Cal-Maine Foods (CALM)
Source: StockCharts.com

 

Energy Transfer Partners (ETP) is a sloppier double top in terms of the underlying pattern. There are higher lows in place, but there really isn't an ascending triangle. There are multiple bottoms in the $55 area, which, if connected, could create a channel pattern. But most of August has traded with a low in the $56s, so the channel really wouldn't be valid. In its simplest form, this is just a double top in the $58.25-$58.50 area. I would not get involved until we see a break over $58.50.

 

Energy Transfer Partners (ETP)
Source: StockCharts.com

 

As the summer comes to an end, who couldn't use a cold one? Molson Coors Brewing (TAP) wants you to choose them. The bulls need you to choose them. The stock needs a push over $75 to get the next leg higher. There are a few patterns that could work here. The simplest is the falling wedge over the past few weeks. This is generally bullish. I could look a bit deeper and argue a cup-and-handle pattern here with the wedge being the handle. The cup is pretty obvious -- a bit deep for my liking -- but it still comes into measurement as valid. Either way, a close over $75 sets up a target of $81 to $83 for me.

 

Molson Coors Brewing (TAP)
Source: StockCharts.com

 

Navient (NAVI) may have the biggest risk here in my view. The stock is pushing back up against $18 and a close over $18 is worth a look. A move over $18.25 is the lowest-risk play in my view. The concern here is the rising wedge, which tends to be more bearish than bullish. Fortunately, the stock seems to be registering that pattern invalid today. A little sideways consolidation would actually be welcomed here, as I believe it will strengthen the upside break. The target here is $19.20, so a bit tame for a double top breakout, but still not bad.

 

Navient (NAVI)
Source: StockCharts.com

 

Last up is Valero Energy Partners (VLP), one of my long-term core holdings. This one has been keeping me on edge lately, so I've maintained hedges against it. Just earlier this month, VLP looked ready to break down into the $30s from a bearish head-and-shoulders pattern, but the stock has bounced hard, much to my surprise. So now, I'm focused on $55.A close over $55 and VLP has a short at $65, although I think $60-$61 is more realistic. Out of the five, I see this one as the least likely to break out and believe it is setup more for consolidation between $50 and $55.

 

Valero Energy Partners (VLP)
Source: StockCharts.com

 

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