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Triple-tops abound

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There look to be a lot of bullish technicals in point and figure charts, but the broader market action has yet to cooperate. With Microsoft (NASDAQ:MSFT) settling its antitrust case with the justice department, we've been browsing charts of software stocks and building a list of potential bullish candidates.

THQ Inc. Chart - $1 box

Shares of THQ Inc. (NASDAQ:THQI) have jumped 8.6% today and the recently hourly trade at $55 has this stock giving a triple top buy signal. On Wednesday, the stock gave traders and "inside day" set up for a bullish trade yesterday. I sure wish I had seen the chart then and checked it against the point and figure chart. Yesterday's move above Wednesday's high of $50.93 may have had "inside day" traders on the bullish side, leveraging off of the bullish support trend from the point figure chart as a reason for bearish traders to call it quits, buy back their shorts and propel the stock higher. Keep an eye on this one for any type of pullback into the recent base, but current supply/demand may have the stock moving higher still.

I don't recommend trading full positions in stocks that are up 8% in a single session like THQI is, but partial positions can be taken to help lessen the blow of a pullback to $52. Then, if the stock gets squeezed and blows off higher, the trader still has a partial position that benefits on an upward move.

Software stocks sorted by price

In Q-charts, traders/investors can use the "quote sheet" feature, then go to "symbols" and "sector lists" to look at stocks in various sectors/groupings. You can sort on any field you want. I've sorted Q-charts "software" list by price. Traders can then click on each stock and if they have a chart window set up, the chart of the stock clicked will display. Traders that find a pattern that is working for them can then begin building a candidate list more easily.

Jeff Bailey
Senior Market Technician
Option Investor

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