Saturday, August 28, 2010

Weekend Market Thoughts

The mid week rally we were looking for materialized. Fridays action came on strong volume and the price action on former leader INTC was impressive in light of bearish views. Im still a believer that rallies must be sold but on the same note we must not let our opinions form our investing views. Let the market action (technicals) dictate on how we trade. Although we are still in correction mode always keep a watch list ready to use when price action warrants it. Look for stocks that show unusual strength in this recent corrections to possibly buy if the market does turnaround.

Can copper be breaking out? The chart of its ETF is making a strong case for it. JJC is forming a cup with handle. Not recommending a buy on it, (illiquid) but if it can break out could be foreshadowing a nice move for the commodities and possibly some economic growth ahead. Perhaps forecasting some interesting pro-business changes come November. MOO forming same type of bullish pattern. (Ag ETF)

Shorts that can be initiated into strength are: NETL @27.50 VLTR @23 CRUS @18 DLB @58 CAVM @25 SNDK @36 SBUX @24.50 CSX @51 KSU @35.50. Short stop on WFMI below 34.30.

Buy stops can be entered for: NVDA thru 10.45 ORLY thru 48.25 PXD thru 60.50 EBAY thru 24 KSS thru 48.25 MTL thru 24.25 DRQ thru 56 and VZ thru 30.48 exhibiting a nice double bottom w/handle formation. MRX forming a nice cup w/ handle formation as well. Buy stop thru 28.25 there. NZ gapped up (all time high, recent IPO in 8/07) on good earnings and can be bought near 19.

Stocks that have shown wonderful relative strength during this correction and behaved well near moving averages are. Winners holding and rebounding off their 50 day MA are: BIDU AAP SWKS CTSH IT CNQR RHT TIBX AN RIG EXPD ARUN DE VMED LVS ROVI ALV BWA TEN CIB. Stocks holding there 200 day MA are AAPL UNP RSG STRI. These are where youll find your winners IF this market turns itself around. Remember John Maynard Keynes famous line when the facts change, I change my mind. What do you do sir? If this market, and that is an IF, changes its mind and wants to go higher we will take the ride with it.

Good luck. Remember keep losses small and your emotions at home.

Author owns FCX, AVGO, AMT, AKAM

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