Chart Request: CMI

In the comments of the last post, Raj asked:

What do you think of CMI? It has pulled back well to previous support levels.

CMI is pulling back towards a strong area of support after a nice breakout. Where you enter depends on your strategy. If you are a stickler for entering as close to support as possible, you may want to wait to see if the stock can pullback $125-126 in low volume. An entry now, at the current levels would still give you a good reward to risk ratio, if using the recent high as your target. This allows you to enter with adequate risk parameters and without fear of missing the next leg up. This was my strategy with today’s FWLT trade.

Technically, OBV and stochastics are both rising and forming higher lows, which is the sign of a strong, trending stock. My only concern is that accumulation is not as strong as some of the other momentum players. While OBV has been rising, up days have only slightly out-measured the volume on down days. Compare CMI to the chart of FWLT in the last post, and you’ll notice the difference in accumulation. That’s why I prefer FWLT to CMI, although I do think gains can be had from CMI.

10 thoughts on “Chart Request: CMI

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  1. I agree with you on FWLT now, today’s action is much more bullish, although volume remains unconvincing. I would even consider going long myself over 130.3.FCX is another trade setup where I see more probability for downside today/tomorrow, especially if it can’t hold over 104.4.I prefer to see a stock show that it’s ready to rally before getting in, like FWLT did this morning with a nice reversal. This usually gives better entry opportunity and lower downside risk.TC

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  2. Nice work, TC. My order did not fill under 126.00. That’s the downside of trading options. I did pick some more up at 130.00, though. Looks like we all should have been in CMI. I hope Rajaram got in on that… -TVH

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  3. FYI, I got stopped out of FWLT this morning at 128 for a loss. I moved my stop up when there was no follow-thru in the first 30 minutes. Looks like there will be a pullback in momentum stocks today. Good luck MS of you’re still in. -TVH

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  4. MS, there was not much logic behind 128, mostly emotions, being overleveraged in other positions and worried that the momentum stocks would spiral while I was at meetings all day. Our trading styles are very similar and so yes, 125 definitely makes more sense. However, I had some good entries in ICE, RIMM and HANS but FWLT was acting the weakest of the group so I decided to tighten up the stop. I took partial profits on the other positions so hope to re-enter above 131 or if it dips back to 125. -TVH

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