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Thinking like an institution might spell an opportunity in IP.

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Did traders get any bullish action in shares of International Paper (IP) back in November near $31 during its move to $36? Did bullish traders get any action in shares of IP when the stock pulled back to $32.50 in late November right before it turned higher and eventually reached a level near $43? Is the recent 4- session pullback near $37 another buying opportunity? I'm not sure, but I like the risk/reward for a bullish trade.

International Paper Chart - last seven months.

Shares of IP have offered bullish traders some opportunities to trade the stock in the past couple of months. If bullish traders are looking for a stock to buy near some support levels this might be one to consider. If you're thinking like an institution and started taking some profits near $43 you may not still be willing to sell near $37. If you're an institution and want out of the stock that you bought from $28 to $32 you'll let the stock rally before you start selling once again. If you were BEARISH at level (B) back in early November and early December, you're looking to cover that position as the stock may be showing too much strength for you liking when it moved to $43. With this in mind, bullish traders might want to take a look at this stock as an opportunity to take advantage of some short-term supply/demand characteristics with a stop just below at $36.50.

International Paper Chart - 10-minute interval.

Let's take a look at a 10-minute chart of IP and set up the trade. It looks like the 50-period MA on this time frame is a short-term level of resistance. See this morning's early move higher right to the 50-period MA (thin blue)? If I were to set up a bullish trade, I could use a break ABOVE this MA as my signal to enter a bullish trade. I don't want to jump the gun as the stock did just break my upward trend (A). I'm also aware of some levels of support (from the daily chart) that could provide enough short-term buyers to get the stock headed back in an upward direction. The reason I want to have my stop at $36.50 is that I think there might be a bunch of traders that have their stops on the books at $37, $36.88 and $36.75. If that's the case, the specialist could easily dip the stock back down just under horizontal support (B) and get some cheap stock. MACD is below the zero level so I want to wait for some type of resistance level to be broken before I get bullish! I can also use the 60-minute chart, along with the daily chart to set up this trade. What is the sector FPP.X doing? If it's showing confirming strength then I can use that as an observation to my advantage. If the Dow Industrials (INDU) begins to show strength another piece of the puzzle falls into place. If NONE of the above happens, I've at least outlined and developed a plan to trade what has been a strong stock, in a strong sector, that offers a favorable risk/reward profile. The 10-minute chart might indicate a bullish target near $40 short-term. The daily chart might indicate a swing-traders target near $43. I don't mind risking $1 to make $3 or $5. Stay disciplined and let the trade develop. Monitor the corresponding sector FPP.X and the Dow Industrials. If they show weakness, I would NOT trade bullish in shares of IP. Those that may have purchased LEAPS when the stock was near $28 back in October can be using the $26.50 level stop as a very good reason to lock in profits on those LEAPS! These are BIG profits and you don't want them to slip away. Pay yourself for the observations you made months ago.

Try to use these techniques!

Whether you want to trade IP or not. Try using some of the techniques mentioned above in other stocks you are looking to trade bullishly in. The above is more of a lesson on how to set up a trade than it is my LOVE for IP. I don't LOVE IP unless it's making me money!

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