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  • Breakout Patterns: ZQK, WAVE, HIG, and PHM Hit the Gas 0 comments
    Aug 25, 2009 3:04 PM | about stocks: ZQK, HIG, PHM

    Quiksilver, Hartford Financial Services Group, Nextwave Wireless, and Pulte Homes may have finally broken the glass ceiling.

    Most stocks are doing well today thanks to a surprise bump in consumer confidence (and despite a ridiculous projected budget deficit), but a small handful of stocks have really set themselves up for a nice run. Pulte Homes Inc. (NYSE:PHM), Hartford Financial Services Group Inc. (NYSE:HIG), Quiksilver Inc. (NYSE:ZQK), and Nextwave Wireless Inc. (OTC:WAVE) all deserve a closer look, as each may be on the verge of some major technical movement.

    Though July was more than a little ugly for mobile multimedia company Nextwave Wireless Inc. (WAVE), the stock seems to have shrugged off those problems and has started to move higher again.

    Today's high-volume rally wasn't prompted by any news about Nextwave Wireless, which is good - it indicates an organic interest. More than that though, we've seen high-volume rebounds for WAVE repeatedly since late last year. That's a hint that the bulls are not going to give up on this one.

    There may be turbulence around $0.70, but our ultimate target price for Nextwave Wireless shares is $3.00... which would mean a full closure of the gap from last August. 

    Don't try too hard to justify that move based on fundamentals from Nextwave Wireless; you won't find them. WAVE will strictly have to be a trade fueled by news and hype. 

    Though we've consistently recommended avoiding the euphoria rally from the home-builders, it's difficult to deny that Pulte Homes Inc. (PHM) shares - deserved or not - are knocking down walls.

    The latest hurdle was a ceiling at $12.50, where Pulte had been capped since late last year. The rally from July to now, however, had one thing the others didn't.... enough volume to push PHM past that resistance.

    We still contend that the real estate and housing recovery hints aren't as solid as investors feel they are, so take them all with a grain of salt. But, optimism and hope may drive PHM to our target level of $16.50 in the meantime.  


    The whole home-building industry is getting some help today by better-than-expected consumer confidence numbers. The Conference Board said the confidence index rose from 47.4 to 54.1 in July, topping expectations for a move to only 47.5. Of course, investors connect confidence to real estate and home sales.
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    It is what it is for Hartford Financial Services Group Inc. (HIG), and what it is, is bullish. In what looks like something of an upside down head-and-shoulders pattern, shares of the investment management company broke above the neckline around $20.00 this week. And, HIG hasn't looked back.

    As for a target level, that's anybody's guess in the shadow of last September's free-fall from $60.00 to $20.00. But, now that the ceiling s broken, there may not be another one until $60.00 is reclaimed again Hartford Financial Services Group shares.

    FYI, Hartford shares got a big boost on news that its mutual funds' net outflows of cash seen in Q4 and Q1 were halted in Q2 when the company saw net inflow again. If that's an economic trend more than a Hartford-specific strike of luck, the good news may infect the other pieces of Hartford's financial service business.

    In other words, the breakout may well have legs. We're setting a checkpoint target of $35.00.

    We officially recommended Quiksilver Inc. (ZQK) in today's newsletter, but since those picks are only distributed to newsletter subscribers, we'll also post the pick here in a public forum.

    Quiksilver actually isn't out of the woods yet. There's a long-term resistance line that goes all the way back to 2007 that could present a problem (and perhaps already is). However, given that ZQK shares have been moving higher (net) since March and recently pushed off a key support level, we wanted to go ahead and get into a position.

    What the chart's reflecting over the last ten months is Quiksilver's transformation form a money-bleeding company to a profitable one. The surf-apparel manufacturer posed terrible numbers in 2007 and part of 2008, but has actually topped estimates in the last four quarters.

    If you look closely, you'll see the buying volume has been quite firm. Our long-term target is $8.00, but a check-in is merited at just under $4.00, where ZQK topped in May.

    If you'd like to know of any changes in our outlook for these four stocks (or if we officially recommend them as trades), be sure to sign up for our free newsletter today. It's delivered 2 to 3 times per week.
    Stocks: ZQK, HIG, PHM
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