Tuesday, January 24, 2012

Wednesday Game Plan

Markets closed once again off sessions lows. The Nasdaq again out performed and closed in the black. It is nearing another big round number in 2800, and has traded remarkably tight the last 4 days. It has traded within a 4 handle range on a closing basis. The S&P 500 has done the same, but even tighter, a 3 handle range on closing basis. Very out of the ordinary, as we are in the heart of earnings season. We had a few more breakouts today, and the more the merrier. Today COH broke out from a 66.64 cup base trigger, and DGX from a 59.49 cup with handle base. Both did so on earnings reports. Others that broke out recently and retested their prior triggers today included CBI which traded to the penny of its 42.02 cup with handle trigger. EXPE retested its 30.52 cup with handle trigger and rallied a dollar on a soft tape. TSS retested its 20.60 flat base buy point and rallied 1.5%. Action from leaders like this add credibility to the health of this recent rally. Of course V followed through another 1.5% today after holding its 98.70 3 weeks tight pattern Monday. A stock which disappointed today was MCD. A great example of why you must demand strong volume on the break out. Took out a 101.69 4 week tight trigger on soft trade Friday. That 1/3 bearish outside day was another red flag. The rails were hit today as KSU sank 8% on earnings, and CNI 5%. Within the transports, tighter action on their respective charts that I like more are FDX TRN. Both are in the process of developing handles on their cup bases. Some bifurcating action to take note of in the alcohol sector include TAP weakening (lost its 40 week today), and BUD DEO accelerating higher. Take note. Handles developing on other cup bases are BUD BLL CE. WFM had a bullish outside day. Had one of the better looking break outs as of late from a 74.55 cup base. AAPL trading 6% higher after hours on a blow out quarter.

Stocks near specific buy points include cup bases ASH 66.46, MRO 35.07, LTD 43.48, CBS 29.78, DHR 55.76, DFS 28.02. Cup with handles are KMT 43.82, EOG 107.37, PXP 39.47, MHK 66.17. Flat bases are FTI 54.98, EL 60.47 and double bottoms are RL 152.10, PII 63.16.

Stocks that can be bought as they retake their 40 week MAs and their buy stop spots are MMM 86.40, ARMH 28, FCX 45. SOA TGT VMW all retook their 40 week MAs today.

Stocks that can be bought at 40 week support are TD 77.50, MUR 58.95, SOA 18.95, COST 81, CL 87.75, ITUB 19.50, Stocks that found 40 week support today were KBR JPM CPX APD TPX KO.

Stocks that can be shorted as they lose their 40 week MAs and their sell stop spots are PH 79.70, NTRS 41.80. TAP MYL both lost their 40 week MAs today. COP met 40 week resistance today.

Stocks that can be bought as they reclaim their 10 week MAs and their buy stop spots are CPX 34, UA 77.15. RAX retook its 10 week today.

Stocks that can be bought at 10 week support are CFX 30, SWI 30.05, ATI 48, APC 77.75, HUM 88.20, GNC 28. FTI PRGO EAT all found 10 week support today.

Stocks that can be shorted at 10 week resistance are BIDU 125, PM 75, TGT 51.60. VFC AMZN ANN all met 10 week resistance today. SO can be shorted with a sell stop of 44.25, as it loses 10 week support.

Good luck.

The author owns WFC JPM XOM. Short DPZ RAI. We were stopped on CL, as our position went 3% against us. We ma reenter as 40 week support held. We covered half of our DPZ short. We will look to reshort that piece soon.

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