Saturday, January 28, 2012

Monday Game Plan

Markets were slightly bifurcated Friday, but both the Nasdaq and S&P 500 registered weekly gains. For the 5th consecutive week now the Nasdaq has outperformed its S&P 500 rival. This week it was a 1.1% move versus a .1%. For the year to date, the Nasdaq has almost doubled the return of the S&P 500 (Nasdaq 8.1% YTD, S&P 500 4.7% YTD). The cries of market correction are growing louder with each passing day. Perhaps that will be the fuel to propel the benchmarks further. Leading stocks played their role in sustaining the rally. This week COH PII AAPL CXO AUY JBHT to name a few. Even better is the action after the generals that did break out. Many retested their previous trigger and held and advanced. They included WFM FFIV EXPE to name a few. Others are consolidating and offer a buy on opportunity as 3 week tight patterns. They include DCI VRSK TSCO. Several earnings reports were spectacular this week. AAPL CAT come to mind. The fact that we could not move higher than where we are off of those numbers is a little disconcerting. A look under the hood of the markets performance was worthwhile. As the S&p 500 was basically UNCH on the week, some groups shined. The global growth theme was on full display this week on CAT report. Others that flew weekly with it were DOV up 7%, JOY 9%. Chemicals benefited from some merger activity between EMN SOA. GRA also moved 5.5% for the week. Metals shone for the week as the Euro retook it 10 week MA, and rose 2.2%, as measured by the FXE. Gold, steel and copper rose smartly on the back of the weaker greenback. The GLD rose 4.25% on the week. JJC rose 4%, but ran dead straight into 40 week resistance. FCX rose 7% on the week reclaiming its 40 week in the process, although it did reverse some Thur-Fri. Steel stocks who demonstrated some muscular action this week were X up 7.5%, STLD 6%, NUE 4%. Curiously not participating were the rails which were down sharply on the week. NSC was lower weekly by 4.5%, KSU 6.5%, CNI 3%. UNP bucked the negative trend and advanced 2%. Any problem identifying the leader of that sector? Did not think so. Defensive sectors were soft this week with the XLU falling back below its 10 week MA Friday, and tobacco losing "smoke", with a disappointing report from MO. Handles forming on their respective cup bases include JEC GD AMP DHR TWI.

Stocks near specific buy points include cup with handles FDX 93.62, TRN 33.02, SWK 73.39, RAX 45.55, ETN 50.30, RS 57.40, CE 50.10, OMC 48.06, EXXI 34.70, PXP 39.47, ENDP 38.02, MHK 66.17. Cup bases are BLL 40.66, ASH 66.46, BIIB 120.76, CBS 29.78. 3 week tight patterns are TSCO 82.08, VRSK 41.11. FTI 54.98 in a flat base, SPR 23.61 in a double bottom with handle pattern, RL 152.10 in a double bottom, and JAZZ 49.24 in a cup with high handle base.

Stocks that can be bought as they reclaim their 40 week MAs and their buy stop spots are BIDU 135, DO 64.50, WLL 52.25, VMW 93. TIBX retook its 40 week MA Friday.

Stocks that can be bought at 40 week support are KBR 31.10, JPM 36.95, COST 81, ESRX 49, MWV 29.75. Stocks that found 40 week support Friday were CPX TCK ARMH UA NEM.

Stocks that can be shorted at 40 week resistance are TAP 43.20, COG 34, COP 70.90, ANN 25.55. NTRS met 40 week resistance Friday. PH can be shorted with a sell stop of 79.75, as it loses 40 week support. TD TGT KO all lost 40 week support Friday.

Stocks that can be bought at 10 week support are HXL 24.50, ARG 77, CL 90, APC 77.95, FTI 51, V 98, SO 44.50, EAT 25.10, WMT 59, VMW 89.50. Stocks that received 10 week support Friday were KSU CFX PM CL CVX ABT GBX JWN. CPX can be bought with a buy stop of 33.90, as it retakes it 10 week MA. UA retook its 10 week line Friday.

Stocks that can be shorted as they lose 10 week support and their sell stop spots are PM 75.05, OKE 83.80, MCD 97.50. ED lost its 10 week line Friday,

Stocks that can be shorted at 10 week resistance are MA 360, VFC 133, PRGO 97, GNC 28, TGT 51.45. CNI HUM both met 10 week resistance Friday.

Good luck.

The author owns JPM XOM WFM. Short RAI DPZ.

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