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1 Stock to Buy, 1 Stock to Short: Electronics

NOK and MSI offer opposite ways to play the electronics space


All day I scan the charts looking for technical patterns to trade, both to the long and short sides. My Trending123 Pattern Scan powered by Recognia is one useful tool I have to scan the markets quickly, and it is showing two technical events in these stocks for traders to take advantage of.

Buy the Bullish Continuation Wedge

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(NYSE:NOK) is an electronics and software company that has developed a bullish continuation wedge over the last 40 days.

After a temporary interruption, the prior uptrend is set to continue. A bullish continuation wedge represents a temporary interruption to an uptrend, taking the shape of two converging trendlines both slanted downward against the trend. During this time the bears attempt to win over the bulls, but in the end the bulls triumph as the break above the upper trendline signals a continuation of the prior uptrend.

Recommendation: Buy NOK for a $4.90 – $5.20 target, with a $3.25 stop.

Short the Megaphone Top

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Motorola Solutions
(NYSE:MSI) provides technology solutions to business and government clients that has developed a megaphone top over the past 35 days.

The recent broadening action tells us that trading has been out of control, but a breakout on the downside suggests we’re starting a more decisive downtrend. With its broadening price swings, the megaphone represents a market that’s unstable and out of control. It typically consists of two successively lower lows between three higher highs, and the reversal signal occurs when the price breaks down below the second trough (the lowest lows) as a sign of a more decisive bearish move.

Recommendation: Short MSI for a $57.40 – $58.10 target, with a $63.49 stop.

InvestorPlace advisor John Lansing tracks the charts all day and offers expert technical analysis in his day trading, options and trading services: Power Trading at the OpenParabolic Options and Trending123.  Trending123 members receive access to the Trending123 Pattern Scan powered by Recognia free as part of their membership. For more information on which service is for you click here.

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