Tuesday, December 20, 2011

Wednesday Game Plan

Markets powered ahead Tuesday on big volume. Speculate on the reasoning all you want, but the price action must be respected. Sure its one day, and big, massive spikes like this are most attributed to short covering, but perhaps Santa was just hibernating for the first 3 weeks of December. Call me skeptical, but we are not paid on our opinions. The Nasdaq was higher by over 3% and closing just above its 2600 level. That level has been a battleground between support and resistance now since mid March. A 10 week test lies 2-3 handles away. The S&P 500 regained its 50 day MA and finished higher by just under 3%. Some leaders which we always pay very close attention to attempted to break out today. Most of them came in sub par volume. Two that did so with proper volume were CELG that took out a 65.92 double bottom buy point, V took out a 98.70 3 weeks tight base. Others SBUX (3 week tight 45.10), SBH (21.04 flat base), ADP (52.85 cup with handle), FMC (86.49 cup with handle), ED (59.99 flat base), SPG (125.16 3 week tight), all came in volume that would be considered under acceptable (greater than 40% on the average daily volume). Semis were up big today with many in the group up better than 5%. Stick with the leaders such as KLAC which retook its 10 week MA and sporting a cup with handle base of 49.49. SIMO looks decent as well here. Look to short some of the laggards such as AVGO CY at their oncoming MAs. IYT is once again approaching its 40 week MA, and perhaps the third time will be the charm. Put in a buy stop at 90.25. Energy was up big today and leaders in the group were up more than 5% included COG NBL CLR. Retail slightly under performed today with the likes of VFC closing lower on the day and UA closing on its low. Pay attention to relative weakness just as much as relative strength. Retail stocks that behaved nicely today were M USNA. WSM is still displaying a bullish inverted head and shoulders pattern. Put in a buy stop there above 40.25. Stocks to be included on a watch list that are currently carving out the right side of their bases are GRA MENT VAL AET VAR EFX FRC VRSN. After hours earnings were mixed with ORCL RHT down and NKE up.

Stocks near specific buy points to be included on your watch list are cup with handles KLAC 49.49, BA 72.86, JBHT 46.69, UNP 106.09, UPS 73.76, AAP 71.10, FFIV 117.40, RAX 45.56, CTCT 25.72, TMK 44.11, PLL 58.30, MJN 76.14. 3 week tight patterns are GNC 29.01, WMT 59.30, PM 77.13, RAI 41.71. Double bottom with handles are BUD 61.08, USB 26.74, RS 51.02. Flat bases are ALXN 70.52, ABT 55.71, PSA 132.30. SCSS in a cup base, with a base on base pattern, 22.29 trigger.

Stocks that can be bought as they reclaim their 40 week MAs and their buy stop spots are TRN 30.30, MWV 30, ASNA 30.40, SAPE 12.50, DOV 59.50, ROK 75.75, APC 76.25, EOG 99.60, EXXI 30.25, HP 59, KEG 15.25, FISV 59, TROW 57.15, RJF 31.50, WFC 27.10, DHR 49.15, ENDP 35.60. Stocks that retook their 40 week MAs today were RTN SPR CNI NSC HON TYC PXP FE NUE CPO MON. SPR can be bought at 40 week support at 19.95.

Stocks that can be bought as they reclaim their 10 week MAs and their buy stop spots are INTC 24.25, COST 84.25, ALB 51.25, CXO 94.75, COG 78.75, JPM 32.75, FCX 38.25. Stocks that retook their 10 week MAs today were ASML BEAV HXL KSU MMM CMG JWN AKAM IBM INTU NUAN CAT CBE CE EMN CLR EXXI NBL AAPL CSCO STLD DE. Stocks that can be bought at 10 week support are DPZ 32, LKQX 28.95. WSM BIIB WCG all found 10 week support today.

Stocks that can be shorted as they lose 40 week support and their sell stop spots are RL 134.50, UA 71.55, PII 53.15.

Stocks that can be shorted at 40 week resistance are DECK 93.50, FDX 85, EMR 51.05, DSW 47, DKS 37.65, ACN 56, CERN 61, PMTC 20.55. Stocks that met 40 week resistance today were COH ROK EOG AXP DFS HLF.

Stocks that can be shorted at 10 week resistance are ARMH 28, CY 18.05, NSC 72, OMC 43, ADSK 33, ATU 22, JAZZ 38, MON 72. Stocks that met 10 week resistance today were ARO COST PMTC COG OXY PXD X JPM QCOM.

Stocks that can be shorted as they lose their 10 week MAs and their sell stop spots are BBBY 60.75, DLTR 79.75, TSCO 71.

Good luck.

The author owns V NUE. We bought some NUE at 39.61 as it crossed its 200 day MA.

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