Tuesday, February 23, 2016

CMG: Chipotle Mexican Grill, Broke Downtrend Line and Resistance, RSI, MACD, MA, ADX all Confirming Uptrend

CX: Cemex Broke Downtrend Line and First Resistance, RSI, MACD, ADX Confirming, Up We Go

NRG Energy Inc (NYSE: NRG)

NRG Energy, Inc. operates as a power company. The company provides electricity; system power, distributed generation, solar and wind products, backup generation, storage and distributed solar, demand response, energy efficiency, and on-site energy solutions; carbon management and specialty services; and various energy services, such as operations, maintenance, technical, development, and asset management services. The company also offers retail energy, rooftop solar, portable solar and battery products, and home services; and various bundled products, which combine energy with protection products, energy efficiency, and renewable energy solutions, as well as offers installation and contract management services for residential solar customers.
Take a look at the 6 month chart of NRG (NYSE: NRG) below with added notations:

NRG had been in a consistent downtrend up until the beginning of December. After that decline, the stock started trading sideways over the most recent two months. While in that sideways move, the stock has formed a common pattern known as a rectangle. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern.
The NRG rectangle pattern has formed a resistance at $12 , and a $9 support . At some point the stock will have to break one of the two levels.

The Tale of the Tape: NRG is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $9 or on a breakout above $12. The ideal short opportunity would be on a break below $9.

Chart of Day: Cisco (CSCO) Overbought…

After gaining nearly 20% of upside in days, Cisco (CSCO) has become incredibly overvalued, technically. Although fueled by an earnings beat, the stock is up too much, too fast… in need of a near-term correction to the downside.
While fundamentally strong, the momentum crowd has gotten ahead of itself. We can see – just by looking at RSI, MACD and MFI – that the run is beginning to die out. It’s also trading slightly above its upper Bollinger Band with an overbought read of zero on Williams % Range.
That tells us the stock is about to pivot south…
Consider buying to open the CSCO April 2016 27 put up to $1.45.

The Largest M&A Spreads On The Market

According to the latest spreads by Sin Letter, there are currently some huge M&A arbitrage opportunities in the market. However, the bigger the spread, the bigger the risk, and a large spread is often an indication of market skepticism that the deal will ultimately go through.

The largest spread in the market today is the 180 percent spread in the price of Williams Companies Inc WMB , which had agreed to a buyout at $43.50 by Energy Transfer Equity LP ETE  that was expected to close by the end of June 2016. Clearly the massive spread indicates that the market has its doubts about the deal.

The nearest potential closing date on the list is the acquisition of Vivint Solar Inc VSLR  by Sunedison Inc SUNE for $15.25, a deal that was expected to close by the end of March. With Sunedison’s stock now trading below $1.50 and Vivint's spread 163.3 percent, the market doesn’t seem to have much faith in this deal as well.
In addition to the two deals mentioned above, Staples, Inc. SPLS’s potential buyout of Office Depot Inc ODP , Brookfield Infrastructure’s potential deal for Niska Gas Storage Partners LLC NKA  and Halliburton Company HAL's potential acquisition of Baker Hughes Incorporated BHI  round out the top five largest M&A spreads.