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S&P 100 Review (2 of 10)

Jan. 25, 2011 9:16 AM ET
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

The following is a review of the S&P 100 to show the technical state of the markets and stocks. The price points indicated are for investing, not trading, so more room is given in stops.

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Bank of America ($BAC) looks very weak, even as the market has rallied relentlessly. Considering it is over bought, and still under new highs, this looks like a short under $11. Most of the large volume days are down days and the Accum/Dist line is clearly trending down.

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This stock is another weak stock, not able to make new highs. $BAX would be a short with very good risk to reward if shorted on a breakdown through $48.

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Baker Hughes ($BHI) has been in an upward channel since December of 2008. The positive divergence of lows between November 2008 and March 2009 (considering the market made lower lows ) should have catapulted this stock. Its ability to stay put, and it weak RS tell me that this is a stock to avoid. The fact that the RSI has been overbought for quite some time, leaving $BHI still under its highs proves further its weakness.

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Considering the weakness of the Financials sector, Bank of New York Mellon ($BK) seems to be fighting its friends. Consistently unable to make new lows below $24, and many high volume weeks occurring on up weeks shows the hidden accumulation in $BK. This may develop a markup stage on a breakout above $32. However, a correction before a breakout would offer a better risk reward entry considering the recent run-up in price.

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Bristol Myers Squibb ($BMY) has seen its RS line decline for a few months, a negative divergence in its RSI, and less volume on its declines than its rallies. This stock appears to be forming a distribution pattern, through which I would not want to hold.

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Berkshire Hathaway ($BRK.B), a consistent stock to watch, has held its bullish support in RSI, and seen consistent accumulation. It looks like currently it is building a base from which to further ascend. Berkshire is a long where it is in my opinion.

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Caterpillar has been exceptionally strong. With straight forwards trends, good earnings, and positive price action, this stock has been on the radar of many momentum and growth traders for quite some time. The current consolidation on low volume boasts more upwards potential for this stock. Never fight a trend unless it tells you that it is over, and I don't see that here.

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I am mixed on Citigroup ($C). Without knowing the market action over the last two years, or the financials weakness, I would say that Citi is building a long-term accumulation base, from which to extend upwards. We see higher and higher lows as it consolidates under $5.75-ish. I see many high volume up weeks, and even an upward trending Accum/Dist line. While the stock may not have rallied with the strong market, it did not decline heavily with the financial sector on bad months either. I am going to say $C is a hold, with a buy or overweight above $6.

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Colgate-Palmolive ($CL), a consumer based company, is showing distribution here. Unable to post new highs, down volume consuming up volume, and a declining RS line hinting towards the coming decline. This goes along with the weakness we have seen in consumer stocks we have seen in the Daily Reports over the last few weeks, and contributes to the GDP negative surprise I am expecting.

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Comcast Corp. ($CMCSA) has held its bullish support on RSI quite nicely as it has trending upward in price and volume. It is extended here, and so would only add on a pullback closer to the 30 week. This stock's patter seems to be quick rallies followed by a heavy pullback. Since a large price move just increased $CMCSA from $18 to $23.50, risk management says to wait on further entry here.

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