Sunday, December 4, 2011

Monday Game Plan

Markets ended Friday with a whimper, but weekly gains were mightily impressive. The benchmarks had their best week since March of 2009. The Nasdaq led with a 7.6% weekly gain, compared to the S&P 500s 7.4% gain. During the week both indexes retook their 10 week MAs (which have been sloping upward since the huge monthly move of October), but failed again near their 40 week MAs (the 40 week MAs are still sloping lower). Talking about 40 week MAs, some heavyweight sector and equities were repelled at those important longer term resistance levels. They include AMZN BIDU LULU. AAPL hit 10 week resistance. ETFs that encountered trouble at the 200 day as well were SMH IYT XLE. The SMH was stopped just above 31 and reversed lower Friday. Keep an eye on the leaders KLAC SIMO which both scored weekly gains of 11%. IYT backpedaled at the 40 week near 90 for the second time in 5 weeks. Leaders in that pack include KSU, and CNI NSC UNP all of which are now in cup with handle bases. XLE was turned back at its 40 week as well near 72, even as oil rose 4% on the week. Big weekly gains by the leaders in that bunch included 13% moves by CXO COG EOG CLR. The XLF sprung to life this week with a 10% weekly advance. I have mixed feelings about this group since the market has advanced while these have lagged. But as always I let the tape be my director, not my opinions. Leading stocks were quiet during the week. In fact a few backed off and reversed after trying to break out Friday. IBM shied away from its 190.63 flat base, and UNP did the same from its 104.26 cup with handle. Not the type of action you like to see. Some stocks which have broken out and continue to trade above their buy points, which you can buy as they retreat toward them (if they do and it is common for them to retest original buy points) are HD 38.85 (double bottom with handle), SCSS 19.33 (cup base), FTI 50.30 (cup with handle), GDI 83.47 (double bottom with handle). As always keep your losses small at no greater than 8%. Live to fight another day with prudent capital preservation rules. Final thoughts are this market maintains a technically driven one and to me true strong markets never really give the chance for participants to get in. They get frustrated and try and chase. This can all change with a stronger complexion of numerous break outs from leaders, and with indexes reclaiming 40 week resistance. DG reports Monday.

Stocks near specific buy points include cup with handles PXP 37.01, RAX 45.56, FFIV 113.70, FTNT 26.30, NSC 76.30, CNI 80.54, AAP 71.10, BEAV 40.14. Double bottom with handles are IP 29.51, USB 26.74, CLR 72.39, JKHY 33.83, KLAC 48.85, DKS 42.21. Cup with high handles are DEO 86.10, GIS 40.35 (that would be an all time high as well). Flat bases are NKE 97.98, ED 59.99.

Stocks that can be bought as they reclaim their 40 week MAs and their buy stop spots are ROK 76.40, KEG 15.45, CAT 98.45, PNC 56.10, TRN 30.25, NVDA 16.25. JEC COP ARW all retook their 40 week MAs Friday.

Stocks that can be bought at 40 week resistance are UPS 70, PMTC 20.60, SAP 58.30, CPO 50, CELG 59.55, USB 24.95, CE 45.10, FMC 80, JOYG 87, PLL 52, COP 71.90, EOG 100, EXXI 30.10, XOM 79.10, OXY 95, CBS 25.05, ARW 37.10, NUE 39.70. ADP CTXS CE PPG MON all found 40 week support Friday.

Stocks that can be bought at 10 week support are DECK 104.50, HXL 23.55, BBBY 60, WMT 56.05, WFM 68, ASML 39, QCOM 53.10, SO 43, JNPR 21.75, INTU 51.50, NUAN 23.80, TIBX 26.50, XRAY 34, BBT 22.50, NEM 65.95, SCCO 29, DOW 26.10, EMN 37.75, DHR 46.05, REXX 14.70, PRU 50. PCP TAP EMC INFA ORCL BHI all found 10 week support Friday. Stocks that retook their 10 week MAs Friday were CTSH JPM NTRS.

Stocks that can be shorted as they lose 40 week support and their sell stop spots are CERN 60.25, CHKP 54.10, NOV 70.50. MDRX ORCL XRAY MAKO EMR all lots 40 week support Friday.

Stocks that can be shorted at 40 week resistance are LULU 50.30, AMZN 200, TIF 70.20, ADI 36.60, AVGO 33.05, KO 67.05, SWK 67, WPI 64, PAY 43.75, CMI 100. Stocks that met 40 week resistance Friday were LULU AMZN ADP NVDA BIDU AKAM CAT KEG.

Stocks that can be shorted as they lose 10 week support and their sell stop spots are DG 38.75, TSCO 69.70, ARMH 27.55, ALXN 65.75, JAZZ 38.60, NUS 45.70. FE MDRX both lost 10 week support Friday.

Stocks that can be shorted at 10 week resistance are RL 147, HSY 58.05, CPHD 36.10. Stocks that met 10 week resistance Friday were RL EXPD AAPL HSY SWN WYNN PCLN.

Good luck.

The author owns JEC. We bought it right here as it broke above the 40 week. We sold KEG for a push as it reversed twice now at 40 week resistance. We will put in a buy stop above 15.45, and look for a retest of the 10 week. Also bought AKAM through the 40 week Friday, but were stopped for a very small loss as it reversed by the end of the session.

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