A very strong finish to the day yesterday as the SPDR S&P 500 ETF (SPY) moved right up to the $191.75 area I referenced in the early minutes of trading yesterday morning. I am a bit more hesitant to make any more projections until after we get an hour of trading in this morning, but the weekly channel trading range is still alive and well. It is here that I want to look for some less common patterns to take shots on the long side.
Fair Isaac (FICO) hosts an intriguing daily chart. The stock saw the short-term and medium-term parabolic stop and reverse (PSAR) indicators form a "party hat" yesterday. Another way to look at it is as a directional arrow. This occurs when the PSARs go from a buy to sell back to a buy over a three-day period. In addition, the moving average convergence divergence (MACD) has turned higher while the relative strength index (RSI) has crossed from bearish (under 50) to bullish (over 50). The same can be said for the force index.
Even more of note is the radical swing in the commodity channel index (CCI) from oversold to overbought in a short period of time. This is often seen as an indicator that a short-lived, but strong bullish move is forthcoming. I'm looking for a very strong move into the $88-$89 region without a close under $82. That's a solid risk vs. reward setup for the next four to six weeks.
With FICO's weekly chart, it is a bit more difficult to justify a bullish stance, but it is not impossible. I could (and will) argue a bullish head-and-shoulders pattern here. Yes, the neckline is steep and the right shoulder is beneath the left, but the setup is still there and the push yesterday created a breakout in terms of price. The pattern alone targets the low $90s from here with a clear stop on any close below last week's lows. If the stock were to see a close below $82, then I fear we'll see at least $5 lower, if not $15, so a stop is an absolute must. Ideally, FICO would hold the strength in price this week, so we could get some more triggers. Any trigger. Just give me one.
The price momentum oscillator (PMO) could continue the swing higher and see a bullish crossover. Or the slightly shorter-term MACD could finish this push higher and complete the bullish crossover. The On-Balance Volume (OBV) could finally push over the 20-week simple moving average, which has been a huge plus for the stock in the past 18 months. My preference would be the trigger on the MACD or the OBV as the PMO can be a bit late to the party.
Even without these triggers, FICO has a strong enough daily chart and a clearly defined stop to be a name I plan on adding if the strength holds in the early going this morning.