Tiffany's Fires A Convincing Buy Signal

06/21/11 08:01:37 AM

by Donald W. Pendergast, Jr.

Tiffany and Co. looks poised for more gains after rising from a minor cup & handle pattern.

Security: TIF
Position: Buy

Although not required for pure system traders, including some powerful chart patterns as an additional filter for your trading system signal output might just suit some trader's fancies. A fresh Rahul Mohindar oscillator (RMO) swing buy signal has just printed, one that confirms a break north from a minor cup & handle pattern on TIF's daily chart (Figure 1). Here's a closer look.

FIGURE 1: TIF, DAILY. This is one chart that definitely helps incite a bullish outlook for further price gains; the current breakout is very convincing.

Graphic provided by: MetaStock.

Graphic provided by: Rahul Mohindar (RMO) from MetaStock 11.

Some charts paint such an obviously bullish or bearish picture that you'd be hard-pressed to want to take a contrary position in that particular market. For example, just look at the already complete first stage of a potential two-stage breakout that's in the works -- one that also features a new RMO swing buy signal and a bullish cup & handle formation. Now, take a step back and place all of that in the context of the stock's long-term uptrend (higher swing highs and higher swing lows) and strong momentum/money flow characteristics, and you really begin to see just how attractive this bullish setup may actually be. In addition, TIF also boasts very strong 13-week comparative relative strength versus the .SPX, which is really the icing on the cake.

Since it's usually a good idea to take at least partial profits near high-profile support/resistance (S/R) zones, it might be a good idea to take at least half (if not all) your position off should TIF rise into the upper resistance line near $77.02 on a continued bullish thrust.

As always, protect your position with a two- to three-bar initial/trailing stop of the daily lows; it's just sound trade management. Summer rallies can be fickle, so protect yourself by taking profits at key support and resistance points and you may actually be able to hang on to more of your gains and/or prevent the market from turning an open position winner into a closed trade loser.

Donald W. Pendergast, Jr.

Donald W. Pendergast is a financial markets consultant who offers specialized services to stock brokers and high net worth individuals who seek a better bottom line for their portfolios.

Title:	Writer, market consultant
Company:	Linear Trading Systems LLC
	Jacksonville, FL 32217
Phone # for sales:	904-239-9564
E-mail address:	lineartradingsys@gmail.com
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Tiffany's Fires A Convincing Buy Signal

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