Sunday, December 25, 2011

Tuesday Game Plan

Markets capped off the holiday week on a cheery note. The Nasdaq gained 2.5% on the week and closed right at 10 week resistance. The S&P 500 rose 3.75% and reclaimed its much talked about 40 week MA. Volume was paltry due to the holiday. But volume has been tame for quite some time now. A look at the S&P 500 back to mid August shows just 9 days in above average trade on a daily basis. Perhaps we are looking at a new normal in slow trade. Groups that seemed to dominate the week were the transports and financials. The IYT retook its 40 week MA. It knocked out the 200 day door 3 times since October. Could the nest stop be par? Pun intended. It did break through in very timid volume, however we must remember that the more times a ETF or stock tests support or resistance, the more likely it is to penetrate. UPS UNP have both carved out nice bases and could be on the verge of breakouts. KSU resumed its leadership status in the group, and TRN retook its 200 day and FDX is poised for its own 40 week test Tuesday. XLF retook its 10 week MA Friday. GS continues to lag, but JPM rose 5%, and had a bullish outside week. WFC took out its 40 week line this week as well for the first time since spring. As my favorite Larry Kudlow would say, possible "green shoots" developing. FRC continues to look good as the recent IPO shapes the right side of a cup base and trades in a very tight bullish fashion. In hindsight, it may be possible that an ongoing rotation out of retail and into these sectors in taking place. Many retail names have continued to implode. This week it was BBBY down 6%, but for the moment receiving 40 week support. DECK TIF LULU have faltered in the past, but look for strength in the group. NKE had a nice earnings report to start the week and has ridden its 10 week line for some months now. M has down the same in regard to its 10 week. But some big volume down days have made this ones support look ominous. Give it the benefit of the doubt as long as that line holds. If not short below it. RL garnered 200 day support this week, but it could fall victim if that line does not hold. Looking at leading stocks this week showed a few breakouts. V took out a 98.70 3 weeks tight trigger. CELG was up everyday last week as it took out its own 65.92 double bottom buy point. AAPL was up everyday last week as well as it retook its 10 week MA and is now looking to complete a cup base with a potential buy point of 426.80. PM RAI WMT SBUX all broke above 3 week tight patterns in soft trade though. ED took out its own 59.99 flat base buy point to establish a new all time high in the process. Two stock I am certainly going to keep a close eye on this week are two that are approaching Y2K highs (from pre 2000 levels). Long term bases are usually strong in nature. ADP is very close to a 55.12 cup base buy point that would put it at decade long highs. WMT has another 9 points to go in its cup base, but the tight trade and recent push above its 3 week tight trigger could warrant a starter position right here. Two stocks that retested prior triggers were EL INTC. INTC retook its 10 week MA this week even after a recent guidance reduction, and tested its 23.49 double bottom trigger to the penny. EL retested its own 106.52 double bottom buy point last week and has now formed a bullish double bottom buy point of 119.09. Keep an eye on strength as this market continues to consolidate Tuesdays enormous gains. This type of stubborn action is bullish in itself. Lets look for solid breakouts, many are setting up, to have us step on the gas pedal a little bit more here and change our cautious bullish stance to a little more aggressive one. But not before the tape confirms this. There will be plenty of opportunities once this occurs.

Stocks near specific points are cup with handles KLAC 49.49, JBHT 46.69, NSC 76.59, UNP 106.09, UPS 73.76, TYC 48.62, TMK 44.11, PLL 58.30, CBI 42.02, NBL 99.27. Cup bases HXL 26.58, RTN 50.35, SCSS 22.29, RATE 22.04, ADP 55.12, NUAN 27.07, FMC 93.10, VAL 40.70, AET 45.49, EFX 40.00, KO 71.87, VRSN 37.83, SPG 131.31. Flat bases are AAP 71.10, INTU 55.53, ALXN 70.52, BIIB 120.76, HUM 90.86, CPO 53.22. 3 week tight patterns are DLTR 84.09, ABV 36.75. Double bottoms are EL 119.09, RHI 30.26 (1 year pattern). RS 51.02 in a double bottom with handle pattern.

Stocks that can be bought as they reclaim their 40 week MAs and their buy stop spots are FDX 85.80, ASNA 30.40, OMC 44.60, CBE 56.30, DOV 59.75, ROK 75.75, CE 45.75, PPG 84.50, JEC 41.50, EOG 99.65, KEG 15.50, OXY 95.30, FISV 59.10, RJF 31.60, DHR 49.25, DE 81, ENDP 35.70. Stocks that retook their 40 week MAs Friday were UA TRN MWV SAPE HP KEG TROW ARW.

Stocks that can be bought at 40 week support are SPR 20, MWV 29.70, BBBY 56.35, APC 75.75, EXXI 30, KEG 14.95, NUE 39.30, NEM 59.50. Stocks that found 40 week support Friday were RL PAYX.

Stocks that can be bought as they reclaim their 10 week MAs and their buy stop spots are CLF 66.30, DVN 64.25, COG 78.80, ALB 51.80. COST CAT both retook their 10 week MAs Friday.

Stocks that can be bought at 10 week support are NKE 94.25, ASML 40.20, MELI 80, COST 83.85, LKQX 29, M 31.05, RAX 41.90, NUAN 24.85. WSM CSCO BIIB X QCOM all found 10 week support Friday.

Stocks that can be shorted at 40 week resistance are DECK 93, ARMH 27.75, DSW 47, DKS 37.60, LULU 51, TIF 70.10, TIBX 26, WDC 32.50, HLF 53. Stocks that met 40 week resistance Friday were FDX CERN EOG OXY.

Stocks that can be shorted at 10 week resistance are COH 61.90, VFC 133.70, AVGO 31.60, CY 18.05, TSCO 72, SWI 29.20, IBM 185.50, ADSK 32.95, CERN 62, PMTC 20. NOV CLF met 10 week resistance Friday. DPZ can be shorted with a sell stop of 32, as it surrenders 10 week support. CXO lost 10 week support Friday.

Good luck.

The author bought some IYT on the close Friday as it retook its 40 week. As I mentioned Thursday I felt that I would regret selling my PM V NUE longs, and I did. It is frustrating a bit, but I also know the opportunities constantly present themselves on a daily basis. We must preserve our mental capital to take advantage of those situations, and not let our resentment prevent us from capitalizing.

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