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Complete Monday Game Plan

Markets Friday closed slightly bifurcated with the Nasdaq finishing up barely, and the S&P 500 down marginally mirroring the action for the week. Both indexes lost ground but the Nasdaq outperformed closing lower by .8%, compared to the S&P 500s 1.15%. The Nasdaq has down finished lower on a weekly basis 5 of the last 6 weeks. The Nasdaq's chart is looking a bit weaker to me, as volume is picking up on downside days, but it did find taut support at the 2900 level twice this week. The S&P 500's chart looks somewhat better, and it is way to early to tell but perhaps it is carving out a double bottom base with a trigger near the 1415 level. But that is way to premature as we are still mired in a shallow correction. YTD the Nasdaq is still up 12.6%, and the S&P 500 is higher by 7.6%. Perhaps a reversion to the mean with the S&P 500 playing catch up is in the cards. This is mere speculation, but we must prepare to succeed. SDS is now firmly entrenched above its 10 week SMA which has not happened since the big advance commencing in April. It has been a good harbinger of market predictability as that 10 week acted as an annoying pest each time it tried to reclaim it to the upside since October.

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Stocks that can be put on a watch list until market climate improves are 3 week tight patterns MAR 40.55, PPG 108.05, KO 77.92. Cup with handles are ITW 58.34, CAKE 33.40, SO 46.35. Flat base triggers are FUL 3.58, WFC 34.69, FMX 85.55, DFS 34.53, JBHT 57.53. 4 week tight triggers are SRE 65.50, CL 100.91. Double bottom with handle is CNH 47.72, and PENN 46.58 in a cup with high handle.

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Stocks we are watching to see how they respond to former triggers are ALL and its 34.50 double bottom trigger it took out 5/8. It was a lengthy pattern viewable on the weekly chart going back 2 years. It also emanates from the strong insurance sector, where ACE ACGL CB are all behaving admirably. FBHS, a recent spinoff from BEAM has been trading nicely, and broke out of its first base which was a flat base with a pivot of 22.42 on 4/27. Look to see how a retest holds up. Keep an eye on AMT and its 64.65 flat base trigger, where its volume confirmation came a couple days late on 5.3.

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We like to stress here that the best breakouts work right away. So when they do not and then proceed to fall below the trigger on heavy volume, and through the 10 week it is time to look for a shorting opportunity. Some recent examples include TRMB MBT GRMN. TRMB took out a 52.60 cup with handle trigger on 3/13, but fell in heavy volume below the 10 week 5/4. Look for prior 10 week support to become 10 week resistance and short near 53. MBT broke through a 19.16 cup with handle trigger 4/30, but lost 10 week support 5/8 on heavy volume. A run up to the 10 week at 18.40 should be shorted. GRMN took out its own 48.40 double bottom trigger on 5/2. It also lost 10 week support 5/8, and a move back toward 46.55 should be sold. Volume has been soft on this one as it lost its 10 week and perhaps a new base will emerge but the trigger violation puts it in the penalty box.

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Stocks that can be shorted as they lose 10 week support and their sell stop spots are AAP 87.50, HD 49.65, CNI 79.50, LTD 47.75. HOG CIB DKS RNDY all gave up 10 week support Friday.

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Stocks that can be shorted at 10 week resistance are M 39.95, UGP 22.05, LOW 30.95, NKE 110, PM 87, MHP 48, SHFL 17, MAT 33.10, MW 38, UPS 78.75. Stocks that met 10 week resistance Friday were RTN INTC RAI FIS ALB DHR CMCSA PETM.

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Stocks that can be shorted as they lose 40 week support and their sell stop spots are WM 32.60, GOOG 590. Stocks that can be shorted at 40 week resistance are JBL 21, NBL 92.20, NOV 71.75.

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Stocks that can be bought as they retake their 10 week MAs and their buy stop spots are UPL 21.60, EXPR 24.70, FDX 91, WMT 60.30, FIS 33, TMK 49.25, CTAS 39.30, TSS 23.15.

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Stocks that can be bought at 10 week support are TDC 68, SUSQ 9.75, AOS 45.10, MCK 88.05, MO 31.05, NCR 22, UNP 110, CCI 54.10, VRSN 39.20, INXN 18. Stocks that found 10 week support Friday were BBT BUD ROC FTK ALLT DEO IACI CRI HD CYT DISCA RHT.

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Stocks that can be bought at 40 week support are EL 55, FAST 42.10, JWN 49.50, CDNS 10.60, EOG 100, CMI 102. DE JPM FRAN all found 40 week support Friday. MON can be bought with a buy stop of 74.25, as it retakes its 40 week MA.

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Good luck.

The author owns FLU XLU PAG ALK. Short PIR FL.