In last week’s post I mentioned the market was close to a short term bottom and our VIX buy indicator was close to triggering. It was clear that the market heard exactly what it wanted to from the FED on Wednesday and we were off to the races.. Not only does it look like the FED provided the impetus to kick off the year end (Santa) rally we have been waiting for but it looks strong enough that it will likely push it on to new all-time highs. Since a rising tide lifts all boats I am seeing a plenty of excellent setups and I thought I would post a couple of opportunities that came up on my radar.
The first is FireEye (FEYE) the internet security company. It went public in September of last year and jumped more than 300% from its IPO price and peaked at $95 in March. The 2 months following the peak were disastrous for shareholders as price plummeted 70% bottoming in May to gust above its IPO price. Since then it has been consolidating with each attempt to move higher being rejected, as you can see in the chart below constrained by the blue down-trending resistance line. This week it broke above that line on strong volume and a turn up in momentum on both the RSI and MACD. You should also notice it is approaching a very important (gray) horizontal resistance just above. If it is able to push through and it looks like it will, the upside target is 43-45 which would present a very nice 30% gain from here.
The second idea is Organovo (ONVO). This company has a really interesting business (3d printing of human tissue) and if you haven’t heard of them I would encourage you to dig a little deeper as they present the very interesting and potentially compelling long-term opportunity based upon their technology. Technically the chart for ONVO is similar to FEYE in that it peaked, has been in a long-term downtrend consolidation and broke out (from both down-trending and horizontal resistance) this past week. While momentum is bullishly configured we have yet to see a volume spike I like as it provides confirmation that the rest of the market is in agreement with you. What I am expecting is a small push higher and then a back-test to the breakout level. If that occurs and holds that would provide what I believe would be an excellent entry. ONVO, like FEYE has big upside potential with the first stop being just above 9.