Thursday, December 8, 2011

Friday Game Plan

Markets were whipsawed Thursday, as investors were once again disappointed by Euro zone solutions. Volume grew slightly, but the benchmarks closed hard upon their lows for the day. Volume has been muted as of late. Perhaps the Dodd/Frank bill is already taking effect with the smaller pool of traders on the street. Maybe light volume is the new normal. The S&P 500 lost 2.1%, the Nasdaq 2%. Discouraging was the fact that the indexes disregarded some positive domestic news. Jobless claims came in well below the 400K figure. We do not normally follow the Dow, but it closed below the psychological 12000 level today. The Nasdaq finished just under its round number of 2600, but did manage to find 10 week support. Some important groups to focus on were the financials today. XLF finished just above its 10 week MA, as did some of its components JPM GS. GS actually had an inside day even though it closed lower by 5%. Inside days are usually benign as the previous trend normally resumes itself. XRT lost just under 2% today, and its chart does not look all that bad. Looks like its headed for a 200 day test at 51, and still sports a 55.02 cup with handle buy point. Action was mixed in the group with COH DKS finding 10 week support, while LTD RL PII all surrendered it. Ags continued their horrible recent action with MOO down 3.4% and losing 10 week support in the process. DE had an outside day and POT was thrashed 6%, AGU 4%. As we have been discussing the scarcity of break outs from leading stocks has been worrisome. More leading stocks that have broke out are now trading back below their original trigger points as well. MELI INT come to mind. FTI is right back at its 50.30 cup with handle buy point but the volume was strong today. AAPL was a lone bright spot today as it recaptured its 10 week MA, but that might have been a contrarian indicator as it has been soft recently. The wide and loose action of the former 800 lb gorilla is not characteristic of a leading stock. On days like today it is important to recognize where the relative strength resided. Today it came from SIMO NUS DPZ MCD.

Stocks which are near specific buy points, and should be treaded upon very cautiously here, are AAP 71.10. Flat bases are ED 59.99, DG 40.81. Cup base ABV 36.40 and CBI 42.02 double bottom with handle.

Stocks which can be bought at 40 week support are BEAV 36.25, PCP 156, QCOM 54, JBHT 43.15, ACN 55.90, ADP 51.05, PMTC 19.15, CELG 59.75, ABX 49, PLL 52, APC 76, CVX 101.60, EOG 99.75, XOM 79.10, GDI 78. Stocks that found 40 week support today were QCOM CPO JEC TROW JOY NOV PXD NUE ROK.

Stocks that can be bought at 10 week support are ADS 98, BIIB 107.70, NKE 92.90, UA 78, HXL 23.85, ED 58, GNC 25, SBH 19, SCSS 18.75, SBUX 42, INTC 23.50, NVDA 14.60, SO 43.05, CNI 75.05, VMW 94.10, INTU 52, RHT 47.50, HSY 58, XRAY 34.25, EMR 48, DFS 23.65, BBT 22.60, USB 25, NTRS 38, CLF 64.90, FCX 37.50, CE 41.25, COG 76, CRZO 26, DVN 62.40, OXY 90, TCK 35.80, ARW 34, DD 45.75, WERN 23.05, STLD 12.10. Stocks that found 10 week support today were HXL DKS FE SGI TIBX WY JPM GS NEM DOW EMN RRC.

Stocks that can be shorted as they lose 10 week support and their sell stop spots are VFC 132, ADI 34.70, AKAM 25.75, COH 60.60, PAY 40.20, PPG 81.75, BWA 67.60. Stocks that lost 10 week support today were BIDU CMI SU DHR PII RL PCP WFM LTD CTSH NUAN BHP RIO.

Stocks that can be shorted as they meet 10 week resistance are AVGO 32.50, ALXN 66, PII 59. MON met 10 week resistance today.

Stocks that can be shorted as they lose 40 week support and their sell stop spots are JAZZ 35, HLF 52. Stocks that lost 40 week support today were CPHD HON IP PH COP EXXI OXY ARW WERN.

Stocks that can be shorted at 40 week resistance are ARMH 27.95, CERN 61, CHKP 54.50, SWK 67, CPHD 33. ORCL KO PNC all met 40 week resistance today.

Good luck.

The author owns JEC ROK GIS. We covered CERN for a small gain today. Today hurt for sure, and we reduced our long exposure a bit, but the catalyst for getting into the 3 longs we have are still intact and we are basically UNCH on each of them. Of course seeing gains turn to losses hurts as well.

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