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1 Stock to Buy, 1 Stock to Short: For-Profit Education

DV and BPI offer opposite opportunities in the for-profit education 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 Bottom Triangle

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Bridgeport Education
(NYSE:BPI) is a holding company that operates for-profit colleges Ashford University and University of the Rockies with both live and online classes. Though the company has seen criticism for its recruiting practices, it remains profitable.

The bottom triangle pattern supports the company’s history of strong growth. The price seems to have reached a bottom, showing signs of reversal as it has broken upward after a period of uncertainty or consolidation. A bottom triangle shows two converging trendlines as prices reach lower highs and higher lows. Volume diminishes as the price swings back and forth between an increasingly narrow range reflecting uncertainty in the market direction. Then well before the triangle reaches its apex, the price breaks above the upper trendline with a noticeable increase in volume, confirming this bullish pattern as a reversal of the prior downtrend.

Recommendation: Buy BPI for a $12.90 – $13.40 target, with a $9.40 stop.

Short the Megaphone Top

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(NYSE:DV) is a company that operates for-profit colleges internationally…and when it comes to its stock, it appears to be on the verge of flunking out. However, you can profit by shorting this megaphone top pattern.

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.

This pattern developed over the past 54 days, making this an intermediate-term (six weeks to nine months) trade.

Recommendation: Short DV for a $23.75 – $24.75 target, with a $40.41 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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