chartsmarter's Instablog

An Appetizing Employment Report?

Mon, 11 Mar 2013 06:10:41 -0400

Friday morning delivered an employment report that the markets digested pretty well. There were aspects of the release that could have fueled both the bulls and bears, but the bulls prevailed. 236,000 jobs created were well ahead of the 171,000 estimated, but the labor participation rate sank to 63.6%. Price is king and not only did benchmarks advance Friday, but they held the near 2% weekly gains going into 830am release. The robust gains heading into Friday, could have been an easy excuse to give back at least some of the strong move, but the indexes remained stubborn. This benign report is important, because remember 2/3′s of GDP, emanates from consumer spending. With an improving job situation, consumers may part with more of their paychecks, and some sectors could get more of a boost than others.

Markets and stocks themselves tend to predict the future very well. Some groups will anticipate in an uncanny way, that even astute investors may not realize at the time, that healthy gains will be reaped going forward. As a technician I believe this picture is painted through the stocks charts. If you examine a stock or sectors movements closely, and follow the money, you most often will be rewarded with powerful gains. A group that has caught my eye that is starting to benefit from an improving jobs climate, and will most likely continue is the casual eating industry.

The Golden Arches, MCD, a Dow component sniffing out par, had superb volume Friday confirming Wednesday's cup with handle breakout from a 96.42 pivot point. With the Dow being a price weighted index, MCD, being the 4th highest priced stock (only 3 others are trading above 100, IBM CVX MMM), could keep the Dow's all time highs rolling right along. Look for a retest of that cup with handle pivot for a good entry.

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CMG a former best of breed behemoth in the group, has ran into some trouble. The stock is mired in its own personal bear market, down more than 27% from its most recent 52 week high. The stock did reclaim its 200 day SMA this week for the first time since last summer, but it is lagging. Its misfortune however has laid the groundwork for other, innovative companies to prosper. PNRA, as you can see on this weekly chart has enjoyed decent 200 day SMA support for more than a year now. The stock has also carved out a valid flat base trigger of 175.36. The formation is almost 6 months long in duration, and the longer the pattern, the better the chances of success.

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As we lost an hour of valuable sleep last night, and find ourselves in the month of March, a college basketball frenzy awaits us. Another young, contemporary stock that captures the spirit, and profits from this season the most is Buffalo Wild Wings. A look at BWLD's weekly charts demonstrates the monster move the stock had from the beginning of last year when it had a monster move on 2/8/12 after a very well received earnings report. The stock has had some hiccups this year, but weekly chart smooths the overall picture out, and lets you see the trend. The stock this year has been in a basic range, with 70 being support, and 90 resistance. In fact this stock can be bought with a precise 90.00 flat base trigger on strong volume.

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There are many others I could talk about like CBRL, which is sitting at an all time high, after eclipsing a 69.40 flat base trigger it took out on a very tasty earnings report, pun intended. The strength there is mighty impressive giving the locations of many of its restaurants, near highway rest stops, with gasoline prices costly. KKD has exhibited very tight trading, as it has made extraordinary moves recently. Newer IPO's like BLMN, whose chart will hardly make you cry, to BKW CHUY FRGI, are further evidence that the consumer may just be on the mend, ready to invest in some meals outside the home. Perhaps some of the names will fatten up your portfolio, if this recent trend continues.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Pairs To Mitigate Risk In Challenging Times

Sun, 04 Nov 2012 22:14:40 -0500

During confusing market times as these, individual sectors will truly reveal the men from the boys. This gives opportunities to investors looking to capitalize on discrepancies within these industries. Remember one simple golden rule in trading is to buy strength, and sell weakness. A common strategy to utilize in this process would be a pair trade. Lets take a look at some potential pairs going forward.

Taking a look at the transport sector is a good place to start. First we can take a look at the rails. Stocks acting firm include CP KSU UNP. Bifurcating action can be witnessed with the softness from laggards like NSC CNI. Within the truckers you can see strength exhibited by JBHT ODFL, and weakness from CHRW EXPD. A trade I would really consider would be putting a long on with FDX above a bullish looking cup with handle trigger of 94.36, while shorting rival UPS as it falls below 10 week SMA support with a sell stop of 72.75.

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Relevant with the holiday season approaching another pair I am eyeing hails from the toy group. MAT leapt 5% post earnings, and taking out a flat base trigger of 36.35 in the process. It remains just above that pivot and 10 week SMA support which resides right at 36. Playing the role of foe is HAS, which has vastly under performed and has a 40 week SMA test that looks ominous. I would initiate this pair as long as MAT remained above its pivot and 10 week support, and with a sell stop of 35.20 on HAS below essential 40 week support.

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Good luck.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Complete Monday Game Plan

Sun, 28 Oct 2012 09:56:35 -0400

Markets capped off the week Friday basically UNCH for the week. The S&P 500 surrendered its 10 week MA Monday and was never able to recover it. However it is defending the big round 1400 handle nicely thus far. The Nasdaq finished lower for the 5th time in 6 weeks, but interestingly reversed to finish above that line. Last time it did that was on 6/4, and it went to rally 400 handles in the process to the mid September highs. For that reason I am bullish on tech and we have a great risk/reward entry here in my opinion. Am I saying its going to duplicate that monster rally from early June to mid September? I am not that smart, in fact I remain skeptical, and that doubt is a necessary ingredient for benchmark fuel going higher. Some of the better tech charts out there are ACN SNPS. Others that mirrored the Nasdaqs bounce off the 200 day this week were AAPL LNKD CRM. With that being said, still concerning for the first time is the 52 week new highs versus new lows, which has recently seen news lows outnumbering new highs. Home builders are starting to look a little weary, and perhaps are just in for a well needed pause. All I hear about in the news is housing euphoria. The easy money may have been made. XHB is sporting a 26.45 flat base trigger, but distribution is starting to perk up. Fringe players like VAL SHW LOW all lost 10 week support this week. Among energy stocks, EOG continues impress me more and more all the time. Where some old favorites like CAM NOV FTI have faded off to the energy doghouse, this one seems to demonstrate relative strength time and time again. Flat base trigger for this one is 119.79.

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Stocks that can be shorted as they lose 10 week support and their sell stop spots are FOSL 85.80, ALL 39.40, CTRX 47, WMT 73.75. Stocks that lost 10 week support Friday were TRW NRG VIAB PVH AOL RY NWS ESRX CLX MAS.

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Stocks that can be shorted as they lose 40 week support are FRAN 27.75, ULTA 89.75, DLPH 29.40, STX 27.40, COV 53.85, ATU 27.15. TTM lost 40 week support Friday.

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Stocks that can be shorted at 10 week resistance are LTD 49, LPS 28.50, VAL 56, AEO 21.30. Stocks that met 10 week resistance Friday were GNC EL FLR CRUS CXW COH SMBL ALKS IP FWLT.

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Stocks that can be shorted at 40 week resistance are ARUN 19, BEAM 58, HAL 33.10, NCR 22, DOV 59. Stocks that met 40 week resistance Friday were EAT SLB TDC NOV ETN KO ITT TX.

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Stocks that can be bought, as market conditions improve are cup with handles PGR 23.39, ABV 42.22, GME 24.59, EC 64.11, YUM 72.25, DE 87.23. Flat bases are RJF 39.05, CHS 19.53, FLS 135.67, PPG 119.96, ITW 62.19, DOX 33.89. 4 week tight trigger is MHP 56.74.

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Stocks that can be bought as they retest prior breakout triggers are CF EFX MUR. CF took out a 202.43 cup with handle trigger back on 7/17. It is currently below its 10 week MA, but defending its trigger and the big round 200 handle well. AGU in the group is now below last weeks 107.11 3 week tight trigger, but recent IPO RNF in the group looks ready to go. Beware that earnings come Monday. EFX is just above its 49.56 cup with handle trigger from 10/15. MUR took out a 59.89 cup with handle trigger 10/16, after it news of spinning off certain assets was well received.

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Stocks that can be bought as they reclaim 10 week MAs and their buy stop spots are HFC 40, DDS 76.45, BGS 30.25, MR 34.75. Stocks that reclaimed their 10 week MAs Friday were VZ UNP AON EMN N EXPE TGT LIFE. HLS reversed after reclaiming its 10 week MA Friday. In this instance, or for any other trigger ever mentioned in my daily blogs, the catalyst in not existent any more and the trade must be exited. It can always be repurchased if it reclaims it again on firm trade.

Stocks that can be bought as they reclaim their 40 week MAs and their buy stop spots are LF 9.25, XRAY 38.20, KO 37.45, ITT 21.25. MXIM CERN retook their 40 week MAs Friday.

Stocks that can be bought at 10 week support are PCL 42.50, HD 59, BKD 23. Stocks that met 10 week support Friday were MET SU OCR CTAS LYB CCE BZ MDC KORS CVE ITW DOX ROP AKAM SYMC LUK INXN AIG WMB PAG MDAS PNRA SNI DHI LMT CBD EXH PXD.

Stocks that can be bought at 40 week support are ASH 67, M 37.70, CAKE 31.95, FDX 89.90. Stocks that found 40 week support Friday were CBS CBST DAR WWW BMY HES ASNA CME NBL NUE.

Good luck.

The author remains flat.

Complete Friday Game Plan

Fri, 19 Oct 2012 02:07:01 -0400

Markets finished lower Thursday, tech especially so as GOOG earnings report was leaked mid session. The Nasdaq looks like it hit stiff 10 week resistance, and at the round number of 3100. Markets do tend to pause at big round numbers. The earnings misses from IBM yesterday, and GOOG today, are among tech leaders. When they get hit I get concerned. Lets remember earnings are "managed or massaged" these days for success, so when they miss it is a real miss. We had a few breakouts today that took out their pivots by one penny. AOS took out a 3 week tight trigger of 59.03, and HNZ a flat base trigger of 58.41. HNZ lacked the volume pop necessary. LZB did eclipse a 15.78 cup with handle trigger today as well. Sin stocks has a rough day today as PM plunged 4%, as it nears a 40 week test. BUD lost more than 2%, but still looks good above the 10 week MA. BIIB seems to be getting tired as its chart is sporting distribution at all time highs, and 10 week support looking tenuous. On a good note UNP rose more than 1% on earnings, but off highs. JBHT in the group, completed the 4 days I like to see a gap up hold today. Others needing a couple of days to do the same include MAT MUR.

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Stocks that can be bought as they take out the following specific triggers on firm trade are cup with handles ASNA 22.28, FLR 60.92, AMX 26.60, IAG 16.98, FWLT 24.83, MSI 52.02, CTRX 52.38, CBD 49.18. Double bottoms are, utilities which I am starting to like, WTR 25.94, AWK 37.96. Flat bases are CHS 19.53, BLL 43.80.

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Stocks that can be bought as they retest prior breakout triggers are RMD LEG ROP. RMD took out a 40.09 3 week tight trigger on 9/27. Volume confirmed the move 10/4. It hails from the medical device group, where MDT is still holding up well, but some others like EW TMO faltering. LEG took out a 4 week tight pattern on 10/16. It benefits from the housing rebound, and LZB in the group took out a 15.78 cup with handle today. ROP took out a 108.99 flat base trigger on 9/21. ETN AME in the sector are holding up well, but DHR fell post earnings.

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Stocks that can be bought as they reclaim their 10 week MAs and their buy stop spots are OII 54.60, TSS 23.75, CAT 87.85, ARRS 13.50, ADI 40, MR 35. Stocks that reclaimed their 10 week MAs today were COH RTN VZ. Stocks that can be bought as they reclaim their 40 week MAs and their buy stop spots are ADM 29.70, PXP 39.60, ARG 84.25, FAST 46, DNR 17.10, OI 21.20. RIG retook its 40 week MA today.

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Stocks that can be bought at 10 week support are JWN 56.50, CAM 55, BUD 85, LCC 11, AJG 36.10, CBST 46.60. Stocks that met 10 week support today were IACI ARUN KSU SJM NOV GGC BLL D DPS CBE MAR ITT DKS.

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Stocks that can be bought at 40 week support are XEC 62.75, BMY 33.50, SNDK 42.05, BC 23, CLR 77.70. Stocks that met 40 week support today were RDSA ETN NUE DHR HAR CHRW HP BDX.

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Stocks that can be shorted as they lose 10 week support and their sell stop spots are FMC 55, LIFE 48, VRSN 47.70, DKS 50.70. Stocks that lost 10 week support today were PNR PM GWRE YNDX DHR DSW AKAM SCSS. Stocks that can be shorted as they lose 40 week support and their sell stop spots are OMC 49.20, STX 27.15, BRO 25.10. BBT lost 40 week support today.

Stocks that can be shorted at 10 week resistance are FTI 47, COV 57.90, NXPI 24.45, TSO 40, CERN 73.50. Stocks that met 10 week resistance today were SNPS XLNX PCAR RVBD UPS PWR. RHT can be shorted at 54, 40 week resistance. AKRX MPWR QCOM BEAM all met 40 week resistance today.

Good luck.

The author is flat. We sold EWW for a profit of more than $5, which we bought off 10 week support at 63.44 on 9/26. TWTC we also bought 9/26 as it took out a 26.27 flat base trigger. It is still technically sound and above the pivot but stalling. More of not liking the market to much here, and looking to raise cash. XXIA we bought at 15.03 as it retested its prior 14.98 it took out 7/31. We made a profit there of just more than a $1, and didnt like the stalling action near its most recent 16.50 flat base trigger.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Complete Monday Game Plan

Mon, 14 May 2012 09:32:23 -0400

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.