If you are trading stocks, you may want to tighten your stops because there are quite a few stocks that are overbought on both the daily and weekly time frames. Before looking at examples of the overbought stocks, let’s review the Duke Energy charts.

Update on Duke Energy

Back on January 16th, I wrote about a potential entry on Duke Energy. I also cautioned about the ATR stop being a potential resistance area. The blue arrow on the daily chart indicates when the article was written. Currently, Duke has moved up to $87.82 but it may now test for support at the blue ATR ($85) before potentially continuing up to the last high around $91. It is critical that support is found at the ATR.

Trading Stocks – Duke Energy Update

The Duke weekly chart shows all bullish bars and a test of the high is likely.

Trading Stocks – Duke Energy Weekly Chart

Trading Stocks – Tighten Your Stops

Scrolling though the list of stocks that have earning releases this week revealed that most of them are overbought. Here’s an example using Expedia (EXPE).

As you can see from the daily and weekly charts, the Stochastics is above 80 on both. This indicates that the market is likely to at least retrace down to the ATR on the daily chart. However, also notice that price is at the ATR on the weekly chart with the Stochastics at 90.

Expedia Daily Chart
Expedia Weekly Chart

If you were long on the weekly retracement, you should probably tighten your stop or risk losing the potential profits you have achieved. One way to tighten your stop would be to set your stop below the low of the daily bar (minus a few dollars). This way you can lock in profits and, if price finds support at the blue ATR (116), you could re-enter.