No one likes to waste time on Friday, so without further ado, VeriSign (VRSN) sets up as the Bull Chart of the Day both on a daily and a weekly chart.
The stock is challenging its highs not only from August, but also all-time highs. A close over $72 springs VeriSign from any resistance, opening up a path to $75 and possibly $80 here. The toughest part about this chart is we've had three strong days of moving higher. Seeing a pullback to $70 and then a push through $72 wouldn't be the worst thing in the world here.
The chart has the setups I look for in every category: momentum, trend, volume and price. The MACD triggered a bullish crossover yesterday following previous triggers in the Relative Strength Index (RSI, momentum), Force Index (volume) and Slow Stochastics (trend). This is a double top here along with the top of a recent trading channel, so I won't be surprised to see VeriSign take a few tries to close above resistance. Unless we see a close under $68, though, I don't see a reason to stop out of the stock. But I would be more cautious if the 10-day simple moving average (SMA) fell through the 50-day SMA.
The double top does not look as imposing on the weekly chart. This stock has a habit of trading within the eight-week simple moving average envelope plus or minus 6%. We're basically in the middle-upper half here, which has been good for the stock. Ironically, a push to the upper edge of the envelope would be better, as the stock will often ride that high point for several weeks or more. We'd need to see a push to $73.50 in order to accomplish this.
Momentum and trend do support a push here, as demonstrated by the strong RSI and the recent crossovers in the MACD and Slow Stochastics. It's as if the bulls have just been waiting for the trend to play a little catch-up. I'd stick with the same stop level as we find on the daily charts just to be a bit more conservative currently. Even if it bounces back after a stop, re-entry wouldn't come at a much higher price based on this setup.
This is by far one of the strongest charts from a daily perspective I've seen in the last two months. The overall ranges don't appear to be too wide from a risk vs. return perspective. I'm looking at a close over $72 for a triggered entry long or a bounce off a $70 retest, which means I don't want to see a close under $70. It's Friday, so watch for liquidity to dry up a bit as the morning passes us by, and take that into consideration when sizing positions.
Have a great weekend, everyone!
