Monday Game Plan

Markets prolonged their weekly winning streak to 3 straight as January remains in good spirits. The Nasdaq continued its relative outperformance compared to the S&P 500, and that streak is at 4 week now. This week it was certainly helped by good earnings reports from the likes of INTC IBM MSFT. GOOG was not so fortunate. I found it reassuring that the Nasdaq was UNCH Friday with GOOG AAPL down 8 and 2% respectively. The Nasdaq is now up 7% YTD, the S&P 500 4.6%. We had a few more leaders break out this week, with FFIV NTGR CBI EXPE taking honors. Many more are building valid trigger points which must be monitored and included on your watchlist. In this environment it is plausible, and not uncommon, for previous triggers to be retested. One to watch, and where I will most likely have bids placed, are WFM 74.55, SCSS 22.29, V 98.70, ADP 55.12, TSCO 78.32, NUAN 27.07, EXPE 30.52, NTGR 38.57. Stocks that reversed from triggers, and to be viewed on the bearish side were BBBY 63.48 double bottom, CFX 32.79 flat base.

Sectors we like to scrutinize are the IYT. It rose 2% on the week, in line with benchmarks, as it tightly and constructively builds the right side of its cup base. UNP had a stellar quarter and advanced 3% on the week, hitting an all time high in the process. JBHT came within .06 of making it 10 straight daily advances Friday. It was downgraded earlier in the week and shrugged it off to finish in the black on the day. Bad news, good action as we all know must be paid attention too. It is closing in on an all time high, which also corresponds to a 49.22 cup base buy point. Looking for TRN to start building a handle here on its cup. The XLF made a smart move back above its 40 week line Thursday, and closed above that line Friday as well. GS advanced 10% on the week, JPM 4%, WFC 3%. JPM retook its own 40 week MA on Friday, and WFC seems to be comfortable living above its recent 29.73 double bottom buy point. MA has a date soon with its 40 week MA near 320. XLE made it 3 straight closes above the 40 week Friday as XOM, which compromises 20% of the ETF, broke away from an 86.77 double bottom with handle formation. Volume was sub par however, but with a behemoth like XOM, it is hard to move the volume needle. FTI continues to be my favorite set up in the sector with a nice flat base. EOG PXP have finished benign looking cup with handles as well. WLL may have seen some capitulation selling Friday as it plunged 10% at one point, then recovered half of the sell off when 10 week support kicked in. COG continues to fumble losing a quarter of its value in the last 2 weeks. 40 week resistance has proven to be a stubborn foe. SMH had a stellar week gaining 6.5%. It is closing in on its prior 3 week tight pattern which finished the second week in May last year with a trigger of 35.09. That same trigger can now be its cup base buy point. INTC, had a wonderful quarter, has not seen a 26 handle since in plunged below that number, and 40 week support way back in the first week of 2008. KLAC was up 7.5%, an has been a leader for some time now in the semi space. It is looking to break through its 51.93 cup base trigger soon. XLNX also had a nice quarter and advanced 8%, on the week. TXN gained 9% on the week and reports on Monday. Tobacco stocks like PM RAI lost 10 week support this week, and utilities faltering seems to indicate a thirst for a higher risk tolerance.

Stocks near specific buy points include cup with handles HXL 26.17, PPG 90.10, EOG 107.37, PXP 39.47, TROW 60.86, JWN 50.94, VRSN 36.55, QCOM 58.07, DIS 40.35. Cup bases are JBHT 49.22, CAT 112.53, GD 76.03, BLL 40.66, IP 33.11, OXY 101.75, KLAC 51.93, BIIB 120.76. FTI 54.98 in a flat base, RL 152.10, in a double bottom, ABT 56.94 in a 3 week tight and JAZZ 49.24 in a cup with high handle pattern.

Stocks that can be bought as they reclaim their 40 week MAs and their buy stop spots are TCK 43.15, SOA 19.20. JPM NTRS TD all retook their 40 week MAs Friday.

Stocks that can be bought at 40 week support are DOV 58.50, KBR 31.25, TAP 43.35, STLD 14.10, MUR 59, MYL 21, COST 80.95, TPX 60.40. Stocks that met 40 week support Friday were DOV JOY PH MMM UA COST.

Stocks that can be shorted as they lose 40 week support and their sell stop spots are JOY 84.75, PH 79.50. TGT lost its 40 week Friday. VMW can be shorted at 92, its 40 week MA. TIBX NEM both met 40 week resistance Friday.

Stocks that can be bought at 10 week support are HXL 24.45, SWI 30.05, DEO 85, ATI 48, X 26.25, ARG 76.35, VRSK 38.60, CXO 97.50, APC 78, EOG 100, NBL 94, ALGN 23.75, GBX 22.80, HUM 88, AMT 59. DGX AMZN both found 10 week support Friday.

Stocks that can be bought as they reclaim their 10 week MAs and their buy stop spots are CPX 34.15. IBM retook its 10 week Friday.

Stocks that can be shorted at 10 week resistance are BIDU 125.50, RAX 42.75, PM 75.10, ED 59.30, ANN 24.20, SBH 20.30. RAI ANN both met 10 week resistance Friday. PRGO can be shorted with a sell stop of 96, as it surrenders 10 week support. RAX SBH both lost 10 week support Friday.

Good luck.

The author owns CL XOM WFC. Short DPZ KO RAI. RAI we shorted at 40.10, as it falters with 10 week support. KO retook its 40 week Friday so we will be keeping that one on a tight leash.