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Jan. 15, 2014 12:11 PM ETALNY, CSTE, HAL, LBTYA, AABA
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Seeking Alpha Analyst Since 2010

Tom Aspray, professional trader and analyst was originally trained as a biochemist but began using his computer expertise to analyze the financial markets in the early 1980s. Mr. Aspray has written widely on technical analysis and has given over 60 presentations around the world. Many of the technical indicators that Mr. Aspray wrote about in the 1980s, such as the MACD, have since gained worldwide acceptance. Tom is regular contributor to Forbes where he writes a regular Week Ahead column.  His expertise as a technical analyst has been acknowledged by the WSJ as well as some of the best known technical analysts.

Just as some of the financial press was starting to talk about a correction, the market responded with powerful gains. Last week's analysis of the daily technical studies suggested that it would take several consecutive days on the downside to generate sell signals and therefore indicate a deeper correction.

The strong market internals, Tuesday, have moved the A/D lines higher and they could easily break out to the upside with another strong close on Wednesday. If instead we close lower, it will keep the recent trading range intact. The Nasdaq 100 continues to lead on the upside gaining 1.9% and the Dow Transports also outpaced the S&P 500 as I still like stocks in this sector.

Over the holidays, I came across an article Look Who's on Top Now from last summer by Mark Hulbert. The article focused on the Motley Fool as three of their advisory services had led his five-year performance rankings through June 30, of 2013.

All three of the services follow a fundamentally-based buy-and-hold strategy and typically hold their position for three to five years. I have found that those stocks favored by fundamental analysts are often worth watching as bullish technical signals can help improve the entry levels.

In the article, there were six stocks that had been recently added to their winning portfolios and they have done quite well over the past six months. Since the opening on August 5 (the first day of trading after the article was released), the six picks are showing an average gain of 30.9%. So how do their charts look now?

Click to Enlarge

Chart Analysis: Alnylam Pharmaceuticals (ALNY) is a $5.69 billion dollar biopharmaceutical company that focuses on therapeutics based on RNA interference. The stock spiked to a high of $112.50, Monday, on news that Sanofi (SNY) had taken a 12% stake and bought access to one of its rare-disease treatments.

  • The stock hit a low of $85 on Tuesday with the quarterly projected pivot resistance even lower at $79.95.
  • The weekly resistance at $28.50 (line a) was surpassed in May (point 1), and by October, ALNY had doubled.
  • The correction in the middle of November tested the 20-week EMA (point 2), which is now at $61.15.
  • The relative performance confirmed the May breakout as it overcame the resistance at line b.
  • The RS line shows a clear pattern of higher highs as it has been a market leader.
  • The weekly on-balance volume (OBV) also overcame its resistance, line c, in May.
  • The OBV looks ready to make further new highs this week as volume has been heavy.
  • There is good support for the OBV at line e and the rising WMA.
  • ALNY is up 83.4% since the August 5th open.

CaesarStone Sdot-Yam Ltd. (CSTE) is an Israel-based provider of general building materials. It was up 20% the week after the article was published. The stock hit a high last week of $53.99.

  • CSTE dropped back to the early August lows in late October (point 3) as the 20-week EMA was violated.
  • The relative performance broke out to the upside in July as it surged through resistance at line g.
  • The RS line dropped back to its WMA in November and did make marginal new highs last week.
  • The weekly OBV started to surge last summer and then pulled back to its WMA before the Aspray's OBV Trigger (AOT) flipped back to positive in the first week of November.
  • The OBV made further new highs last week as it is leading prices higher.
  • The first good support is now at $45.98 and the quarterly pivot.
  • CSTE is up 46.2% since early August.

Click to Enlarge

Halliburton (HAL) is one of the most familiar stocks on their recommended list as it reached its weekly starc+ band on November 15 with a high of $56.36. It is currently down over 10% from this high.

  • HAL has been below its quarterly pivot of $51.65, so far in 2014, and is testing the weekly uptrend,
    line a.
  • There is support next at $48.71 with the quarterly projected pivot support at $46.95.
  • The relative performance did confirm the November highs but dropped below its WMA three weeks after the highs.
  • The RS line is getting closer now to its long-term support at line b.
  • The daily RS line (not shown) violated its WMA one day after the highs and is now trying to bottom out.
  • The weekly OBV is trying to stay above its WMA and it did confirm the recent highs.
  • The OBV has next key support at the mid-December lows and then the uptrend, line c.
  • HAL is up just 9.8% since August.

Liberty Global CL A (LBTYA) is a $35.1 billion cable TV company that is based in the United Kingdom.

  • The stock broke out above the August high at $82.50 seven weeks ago and hit $90.93 on Monday.
  • The monthly projected pivot resistance is at $93.62 with the weekly starc+ band at $94.25.
  • There is initial support now at $87-$87.50 with the quarterly pivot at $84.39.
  • The weekly uptrend, line d, is now at $79.50 and the tests of this support last fall were good buying opportunities.
  • The relative performance broke its downtrend, line e, at the end of November.
  • The daily RS analysis (not shown) is positive and is confirming the price action.
  • The weekly OBV has made marginal new highs over the past six months but is not far above the support at line h.

What It Means: The other stocks that the article noted had recently been added to their portfolios were Urban Outfitters Inc. (URBN), down 15.4%, and Yahoo! Inc. (YHOO), which is up 48.4%.

I do often look at fundamental buy lists as Alnylam Pharmaceuticals (ALNY) and CaesarStone Sdot-Yam Ltd. (CSTE) were not previously on my radar. Following the technical signals can often optimize your entry point in those stocks favored by fundamental analysts. All of the other stocks will stay on my monitor list as pullbacks are needed for good risk/reward entries.

Of the six stocks, Halliburton (HAL) is closest to generating new buy signals as it has held up quite well despite the weak action in crude oil .

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

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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