Technical Trade Alert: Ann Taylor Stores (ANN) and XOMA Ltd. (XOMA) With the economy starting to find a foothold, and with a stimulus package of some sort on the way, we continue to find interesting trade ideas rising up from the market's ashes.  One of our picks today is a high-end retailer stock. Yes, the organization struggled last year like any retailer did, but the stock's drop may have baked in way too much pessimism. Now those same shares seem to be positioning for a recovery.  Our other pick is a biotech stock. The company recently received a milestone payment from Pfizer (NYSE:PFE) as a reward for the initiation of Phase III drug trials based on this company's biotechnology. That's encouraging news for the long-term, but more importantly, it may create enough inspiration to drive a near-term rally.    Ann Taylor Stores Trying to Break Out Most traders agree that the longer a stock remains in a consolidation range, the stronger the breakout is once the range is finally broken. If that's truly the case, current owners of Ann Taylor Stores (NYSE:ANN) are probably watching ANN's chart pretty closely right now.      Company Name: Ann Taylor Stores Corp.  Stock Symbol : ANN Trade Initiated: Feb. 9th, 2009 Current Price: $6.29 Avg. Volume (3 mo.): 1,899,940 52 Week Range: $3.74 - $29.23  Market Cap: $359.4M  Rating: Technical Trade Take a look at the two horizontal lines plotted on our chart below. The lower one is at $4.76, and the upper on is at $6.30. With only very minor and temporary exceptions, that's the narrow range Ann Taylor shares have been trapped in since December. That may be about to change though ... for the better. Notice how ANN rallied sharply on Friday, and again on Monday. The upper edge of the zone is now under attack. In fact, the stock hit its second highest high in the last twelve weeks today. That's a hint buyers are testing the water here; many more could be waiting in the wings. If ANN does indeed hit new multi-week highs, all those would-be buyers could plow in at the same time, forcing shares higher in a hurry. It's a bit speculative to jump in before such a potential rally materializes. On the flipside, it's a bit pointless to jump into a rally when the rally is halfway over. Sometimes you just have to pay attention to the early hints, and respond when the risk/reward ratio is favorable. Other things Ann Taylor shares have going for them... Volume Though there's been no net movement for Ann Taylor shares since early December, we're seeing a little more volume from the bullish side of the table than the bearish side. How do we know? The accumulation-distribution line is rising, albeit mildly. That's one of the clues there may be more buyers eagerly waiting on the sidelines.... they're actually starting to trickle in.  Moving Average Crossover  We've looked at this 'stupidly simple' idea before; it's worth reminding you that 'stupidly simple' can also be 'highly effective'.  In a nutshell, ANN moved above its 50 day moving average line in late January, and is now starting to bullishly accelerate away from it. If the trend truly is a trader's friend, that divergence can only foster one conclusion - the stock is in a trade-worthy rally . The uptrend may not last forever, but given just how beaten up the stock is, we feel the odds are good the rally could last long enough to translate into a good trade.    XOMA Ltd. Shares Turn the Corner Talk about a change of heart! XOMA Ltd. (NASDAQ:XOMA) shares, which got crushed between September and January, have been on fire in February. XOMA is up 36% month-to-date, but that's still nowhere near September's peak. The recent shift in momentum may well carry the stock back up to those highs though.     Company Name: XOMA Ltd. Stock Symbol : XOMA Trade Initiated: Feb. 9th, 2009 Current Price: $0.90 Avg. Volume (3 mo.): 597,189 52 Week Range: $0.59 - $2.96  Market Cap: $119.9M  Rating: Technical Trade The sudden redirection was mostly prompted by news regarding Pfizer Incorporated's use of XOMA's bacterial cell expression technology. As part of the agreement, Pfizer handed over another $500K to XOMA because the related drug is now entering Phase III trials. Just to be clear, the news isn't a reason to 'invest'. XOMA isn't profitable, and even if the Phase III trial of Pfizer's antibody drug 'tanezumab' goes well, it would still be years before the drug actually created royalties for XOMA.  Yes, it bodes very well for XOMA's future, since the technology could have applications for many more drugs in the future, each of which would create royalties for XOMA. However, there's nothing particularly urgent about owning shares right now with that as the premise.  There is some urgency, however, from a trader's perspective.  The Pfizer news, while not time-sensitive for investors, has started a something of a euphoria snowball. The stock has broken out of its rut as a result, and more of the same could be on the way.  The technical signal here is straight-forward ... a cross above a key moving average line, and then some bullish follow-through. The attraction, however, is just how oversold the stock still is. We saw highs around $2.30 in the middle of last year, versus the current price around 90 cents. Though no technical signal lasts forever, and the euphoria will certainly fade in time, it could still last long enough to dole out nice short-term reward on a bullish trade. This is a fairly speculative trade, meaning the potential is huge, but the risk is commensurate... and the chart is likely to remain volatile. We don't issue targets, stops, or suggested entries on these short-term technical trades. However, we will advise that it could be worth allowing for continued volatility with XOMA - both up and down - after such a strong breakout surge.    Molson Coors Brewing, Brown-Forman Find Alcohol is Recession Resistant Though I have not seen it for myself, I completely believe reports that a bar in Santiago, Chile is serving drinks specifically named to beat the recession blues. The Catedral bar (appropriately in Santiago's financial corridor) has created what they're calling a "Crisis Menu", which offers (again, appropriately) discounted drinks to help ease the pain of an economic implosion. Some of the cocktail monikers include "The Subprime", "In Recession", "Madoff Nectar", "Down Jones", and "Bailout".  There's an old saying, 'When life gives you lemons, make lemonade.' I'm not sure what life would have to be giving us that's so potent we can make a mixed drink out of it, but this recession is obviously more than just one of life's little lemons. Anyway, the rumor is that alcohol sales have not been hit at all despite the recession. In fact, taking a cue from Chile's Catedral, I'm wondering if the economic crunch is actually the reason for a strong liquor and alcohol market. It wouldn't be unusual if it was though - alcohol sales usually do improve in a recession (liquor more so than beer). Consumers are more apt to drink at home during a recession though, as opposed to buying a drink at a bar or restaurant. All joking aside, there may be an investment opportunity built into this quirk. The brewer and vintner stocks haven't really been acting like things have been fine (i.e. they sank in the latter part of last year), but that may have been more market-related than performance related. Now with the selling frenzy over and cooler heads starting to prevail, I'm wondering if there are some big bargains in this group. Molson Coors Brewing Company (NYSE:TAP) boasts a twelve-month P/E of 16.40, and a profit margin of 18.8% for their last quarter. Foreign brewers seem to have created a great deal of success too. Take Fomento Economico Mexicano (NYSE:FMX) and Companhia de Bebidas Das Ameri (NYSE:ABV) for instance - both of them have numbers comparable to Molson's. Brown-Forman Corp. (NYSE:BF.B) sells stuff that's a little harder than beer, but has also managed to do well lately. And, they may continue to do well according to an industry research group. The Vinexpo/IWSR (which tracks wine and spirits sales trends) recently forecasted that consumption of hard liquor and wine in the U.S. will grow by more than 10% between now and 2012. An overly optimistic outlook? Not necessarily. Spirit sales grew by more than that between 2003 and 2007, when we were coming out of the last recession. So, the pace doesn't seem unreasonable now. If the economy really starts to recover in a big way, the pace could be even more impressive.