This morning I added two names with virtually nothing in common except for their charts, and I'm fine with that. I wouldn't exactly call it diversity, but I do prefer seeing two charts in two very different sectors trigger breakout patterns at the same time. Furthermore, neither chart resembles larger indices by any stretch, so I'm not the least bit worried about correlation.
The first is MFC Industrial (MIL). Tim Melvin has done some great work on the fundamentals and value in this company, and now it looks like the chart finally agrees. We are seeing a nice push above $6.10 today, which was a declining resistance line over the past few weeks. Support has been declining, but if we look back to mid-October, we can say the $5.70 to $5.80 area is the line in the sand. With a close below the $5.80 area, I would be on high alert, and I'm out on a close below $5.70. Some may be concerned by the larger megaphone pattern, but this hasn't been a very reliable bearish pattern and it should allow the stock to run to at least $6.50 in the near term. The MACD has been improving nicely for three weeks and now the bullishness is confirmed with the Relative Strength Indicator pushing above 50, along with a bullish crossover in the Vortex Indicator. The biggest concern has to be the lower lows, however, there is enough to alleviate the concern right now.
Let's jump from the commodity space to medical instruments and into Volcano Corp. (VOLC). There is a bit more risk from the standpoint that it has not broken above heavy resistance around $11.50; however, the bottom at $9.80 is well-defined. There is a clear double bottom, along with a "W" reversal pattern, which can be powerful to the upside. There is also a gap waiting to be filled all the way up to $16. The Vortex Indicator is already bullish hinting at a newly establish trend. Meanwhile the RSI pushed over 50, retraced and held; it is now pushing higher again. The MACD has been bullish for some time, but that is skewed by the big gap lower the stock had. The retracement of the MACD and now a push higher is bullish, however.
I am long both stocks, looking at a two- to four-week hold time for half the position, then three to six months minimum for the other half, unless the bottoms are taken out, at which point I will take my loss and move on.