LULU Falls to Heavy Trading Range

lululemon athletica Yahoo! Wynn Resorts Altria Dell

One constant in the financial markets is the steady influx of new traders who find their way to trading and are looking for a way to make money.

Maybe they are new members of the "Booyah Brigade," or perhaps they're former real estate investors looking for some appreciation rather than another tax write-off. But irrespective of the reason they are drawn to the market, they all have one thing in common: They are looking for a winning methodology.

Think about it. Without a definitive approach to the market, you are really at the mercy of your emotions and the news cycle, right? Without a method, you just trade what you feel -- you trade what you hear. You may wind up being right ... or not. But you never really learn from your mistakes, because you have no basis for judging yourself. Instead, the trader with no definitive approach can just blame the market for his losses and walk blissfully on down the road to ruin.

Don't do that. While each approach is different, I'd suggest starting from one basic premise that will keep you out of trouble: Use fundamentals as the criteria for considering whether you like the company. After all, without the company, there would be no ticker.

So start with the company and make sure it passes muster before you even consider trading it. Then, use the price movement -- the technicals -- for cues on buying and selling the stock. After all, one of the basic tenets of technical analysis is that the price always anticipates fundamentals. As such, we should be bullish about a company with solid fundamentals ... but we should be monitoring the price action for signs of deteriorating fundamentals.

Before you see it in the balance sheet or income statement, you'll see it in the price action. If you wait for the fundamentals to tell you when to sell, you'll wind up holding on way too long.

So put a short list together of the companies with solid fundamentals. Then, from that list, find those stocks with charts that show the stock being accepted by the crowd.

Stick with this simple formula, and you'll never stray too far off.

Let's get to some charts.

lululemon athletica has been going gangbusters since the IPO in late September. The stock doubled in value before pulling back over the past few weeks. So where is the stock now? It's right at the level where the heaviest trading volume has taken place -- the mid-$40s.

While Friday's close was down more than 4%, it could have been worse. The stock almost tagged the 50-day moving average before reversing and closing in the upper half of the range. If you're long, try using Friday's low as the reference point for stops. If the stock falls lower than that, I'd sell.

Yahoo! has been lagging its competitors for a while, but there's no denying this uptrend. The stock has once again bounced off the middle Bollinger Band. If you're a fan of Yahoo!, then here's your entry point -- with a stop just below $30.

Wynn Resorts has pulled back to characteristic support in the $140s. If you bought the dip, there's no sense in selling unless the stock falls below support. Also, watch the 50-day moving average for clues. So far, the stock is holding above that level. If that changes, then you might want to cash in your chips.

Altria has continually bounced off the middle Bollinger Band. But despite the broad market weakness last week, MO never even pulled back enough to test the middle band. That's bullish! I'd stay long unless the middle band breaks down.

So far, Dell is holding its gap. But the stock remains rangebound in a very narrow range. If you're a Dell bull, then hang on to the stock unless the gap breaks down. And if the stock instead moves up to a new high, then consider adding to your position.

Be careful out there.