Thursday, September 9, 2010

Evening Thoughts

Today's action on the surface may be construed as bullish, however if you dig a little deeper it may not seem so. A few recent leaders have negative reversals including CTSH, FFIV, PCLN, DECK, NTAP. Chips continue to look weak. AVGO (I was stopped out on that today as it closed below its 200 day), OVTI well below its 50 day, CRUS in an obvious downtrend now, CREE whose chart looks like a red headed stepchild, XLNX whose 200 day is now resistance, and RBCN which found support at its 200 day, but looks rather ominous. RBCN you can put a sell stop to short at 23.75 as it loses its 200 day.

Some strong recent groups that were soft today included real estate whose leaders VNO, SPG, PSA all suffered negative reversals as well today. Precious metals did as too. NEM, ANV, SLW all closed hard upon their lows. JCG struggles with its 50 day too. FDO looks like its churning and a real negative reversal 4 days ago, suggests a short here with a buy stop to cover thru 44.50. And lets not forget WFMI which looks very vulnerable and a short stop can be placed below its 200 day at 34.75.

As weak as today was we do remain in an uptrend. So lets remain open minded an look for buys as well. STRI can be bought thru 23, and NFX thru 52. RAX has a double bottom forming with a buy point of 21.46. CVLT can be bought at 24.75. Stocks that can be bought if they bounce from support at their 50 day MA include BWA @44, TEN @25, WTR @19.50, RADS @15.75, AN @22.50.

Stocks that can be put on a watchlist that are exhibiting relative strength are NBL, a leader in the energy sector that is forming the right side of a cup base. RIG looks strong as it holds above its 50 day MA and its 8/24 low of 49.74 that we blogged about at the time. AMP is building the right side of its base. Look for a handle to form on soft volume or a breakout of a cup formation on strong volume thru 49.64. PXD and EBAY are forming their right sides as well. EXXI has completed its right side and looks like its forming a handle in soft volume. Remember the handle needs at least 5 days to form.

As always plan your trade and trade your plan. Patience and wait for you spots.

The author holds positions in FCX, AMT, NZ, AKAM, NUE. Short of BCE. Stopped on AVGO

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