Five Low Risk Technical Trading Ideas...

Kellogg - K has been in a freefall since breaking support around the $70 level last month.  There was support around this level because it was resistance in June of 2014, January of 2015, and August of 2015.  Then it was support in January of 2016, and again earlier this year in May.  It is now trading around the $65 level and there will probably be support here because it was the lows in the fall of 2015.  It is oversold and will most likely bounce.  A possible strategy would be to go long if it rallies off of the $65 level, and breaks the downtrend line.  The sell target would be $70, and the stop-out would be $65.

 

Flowers - FLO has been trending lower since the middle of May and it is approaching levels where it may find support.  $16.50 was the top of the range last November before there was a huge move upwards, so it may be a support level now.  The key to a successful long trade here is to wait until the downtrend line is broken.  Too many investors try to catch the bottom, but the risk reward ratio is better if entry occurs once an uptrend has begun.  My sell price would be $18.50 and my stop out would be $16.50.

 

S&P SPDR Retail ETF - The XRTs are oversold and trading at levels that have been support in the past, but they are still in a downtrend.  They traded around $38 in early 2016 and in February of 2014.  Each time was followed by a significant rally.  They also bounced off of this level in June.   Again...the key to a successful long trade here is to wait until the downtrend line is broken.  Too many investors try to catch the bottom, but the risk reward ratio is better if entry occurs once an uptrend has begun.

 

Wheat – There may be a low risk short trade in Wheat.  It went parabolic after breaking resistance at the important $450 level.  It is currently very overbought.  Since late 2013 it has traded up with this type of action on four separate occasions.  Each time was followed by a significant selloff.  It is possible that it refills the levels that it gapped up through and trades all the way back down to around the $460 level.

 

Alerian MLP ETF - AMLP is testing resistance around the $12 level.  This level has been important going back to August of 2015.  If it breaks through this level there could be a nice move upwards.  A possible long strategy would be to use a buy stop and buy it above $12.  I’d place my buy stop around the $12.10 level with my target at $12.50 and my sell stop at $11.95.  $12 will probably become a support level once again it this happened.