Monday, December 5, 2011

Tuesday Game Plan

Markets closed Monday with a little vigor in the final 20 minutes, after being up as much as 1.5% earlier in the session. The indexes sold off mid day after S&P warned some Euro zone members that they were being put on a negative credit watch and a possible downgrade. During the trading day, indexes met stiff headwinds at their 40 week MAs. As we mentioned yesterday this market has been very technically driven, ad today proved no different. ETFs, IYT XLE SMH all met 40 week resistance by the close after trading above them on an intra day basis. LULU NVDA KOP CAT MAKO were some individual names that suffered the same fate. A peak at leading stocks was mixed to negative. MELI broke out on heavy volume forom a 90.09 cup with handle base on more than twice its average daily volume. FFIV broke out on very weak volume from a 113.70 cup with handle pattern. Others trying to break out only to fail included UNP 104.26 (cup w/ handle), NSC 76.30 (cup w/handle), FTNT 26.30 (cup w/ handle). DG tried to break out from its 40.81 flat base post earnings for the third consecutive day but closed just below it. IBM reversed after clearing its 190.63 flat base trigger, but did manage to close just above it. Of course these could break out tomorrow, but for now the action is a bit disconcerting. Looking at individual leaders was not encouraging either. KSU has been hitting new highs only to be continuously repelled at the $70 level. COG again was one of the first oil/gas stocks to go negative, which was a good indicator of oncoming weakness in the group. MA finished near its lows for the day. Very bearish action from these leaders which had outside days today included MCD HUM VRSK. Even worse was that these occurred when the previous three hit all time highs. ADS ULTA did not have outside days but had negative reversals intraday after hitting all time highs as well. WERN FMC can be put on the watch list and they are constructively building the right side of their bases. Could become cups or develop handles also. Patience. ETFs sporting specific buy points include XRT 55.02 (cup w/ handle) and USO 39.84 (double bottom w/handle). Quick tale of the tape. If you like gold miners, its imperative to pay attention as always to the technicals of the chart. Take for instance the leader NEM, a chart of beauty, holding onto 10 week support nicely. Contrast that with ABX, whose chart is wide and loose, which makes it more prone to failure. Stick with the leaders and smooth price action.

Stocks near specific buy points, and to be treated cautiously in this corrective environment are COH 66.64, BEAV 40.14, AAP 71.10, KLAC 48.85, CNI 80.54, ACN 62.00, INTU 55.53, RAX 45.56, CLR 72.39, EXXI 32.28, PXP 37.01, PXD 97.20, OXY 101.75. Double bottom with handles are DKS 42.21, USB 26.74, APC 84.52, NOV 76.15. ED 59.99 in a flat base, DEO 86.10 cup with high handle, and NKE 97.78 in a square box base.

Stocks that can be bought as they retreat to their previous buy points, which is not uncommon are HD 38.85 (double bottom w/handle), SCSS 19.33 (cup base), URI 27.42 (double bottom w/handle), EFX 36.00 (cup w/handle), CXO 102.07 (double bottom w/handle), INT 42.22 (cup w/handle).

Stocks that can be bought as they reclaim their 40 week MAs and their buy stop spots are TRN 30.30, PNC 56.10, BBT 24.75, CAT 98.50, KEG 15.45, DD 50.25, ROK 76.40. MDRX ORCL EMR WERN all retook their 40 week MAs today.

Stocks that can be bought at 40 week support include UPS 70, PMTC 20.55, CPO 50.10, CELG 59.50, IP 28, AXP 48, DFS 24.10, TROW 57.35, CE 45.50, JOYG 87, PH 81.90, COP 71.90, EOG 99.75, CBS 25.05, ARW 37.05, NUE 39.75. QCOM TROW PPG PX.

Stocks that can be bought at 10 week support include HXL 23.65, DEO 82, NUAN 23.90, NEM 65.80, REXX 14.75, HLF 56. VLO found 10 week support today. Stocks that retook their 10 week MAs today were RL HSY JAZZ GS.

Stocks that can be shorted at 40 week resistance are TIF 70.25, ARMH 27.80, ADI 36.50, AVGO 33.05, CTSH 71.65, ADSK 36, BWA 72, CMI 100, TPX 60. Stocks that met 40 week resistance today were TRN BIDU AKAM SWK XRAY WPI CAT WPI.

Stocks that can be shorted as they lose 40 week resistance and their sell stop spots are CERN 60.40, CHKP 54.05. ARMH lost 40 week support today.

Stocks that can be shorted as they lose 10 week support and their sell stop spots are DECK 103.50, WSM 67.60.

Stocks that can be shorted at 10 week resistance are EXPD 43.30, ALXN 66, CPHD 36.05. Stocks that met 10 week resistance today were EXPD MON SWN WYNN PCLN.

Good luck.

The author owns JEC GIS. We bought GIS as it broke out from its 40.35 cup with high handle base. It did so on anemic volume and we will keep a tight leash on this one.

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