Markets rebounded nicely from Monday’s light volume losses. Volume on the Nasdaq was strong. Breakouts came back today with a diverse mix of names taking out triggers on healthy trade. They included 3 week tight breakouts from NWL MSI with pivots of 23.97 and 59.58 respectively. DDS took out a 85.57 flat base pivot, and WLL a cup with handle trigger of 49.22. Perhaps the economy is getting stronger, and the GDP contraction reported last week is a one off event. If FDX has anything to say about it, its trading a 5 year highs and depending on its close Friday could complete a very bullish 3 week tight pattern. There are an abundance of other leading stocks potentially honing in on their own 3 week tight trigger pivot points, which will be discussed in the next couple paragraphs. But this is a bullish development as these stocks trade tautly, and pause for 3 consecutive weeks looking to recharge and possibly vault to new highs. The builders, which have maintained their top sector ranking for some time now, may be flashing some sell signals. The ETF XHB has been down 4 of the last 7 days in big trade, and a look at its weekly chart, shows basically no big up volume weeks since the week ending 9/14 when it advanced 6% in sizable volume. Some individual names like PHM RYL MTH LEN found support at their 50 day SMAs, but the volume on the way down was a bit heavier than what is optimal. Time to put a new IPO on your watch list to see when a pivot may develop. NCLH, Norwegian Cruise Lines.
Stocks that can be bought as they take out the following triggers on firm trade are cup with handles MTB 105.02, IMAX 25.06.
Flat base is CPB 37.26.
3 week tight trigger is MDCO 30.97.
Other cup with handles are GPN 50.83, SWK 78.49, JAZZ 58.09, BHP 80.40, TWI 25.11. Other flat bases are SNPS 34.30, TRIP 47.10, VR 37.73, OMC 54.86, TAP 46.45, CBD 49.16, KORS 58.72, NTI 27.37, TOT 55.17. Other 3 week tight triggers are TSM 18.45, DHR 61.59, 4 week tight is WOR 28.70, 5 week tight trigger is ADBE 38.88.
Stocks that can be bought as they retest prior breakout triggers are HLSS SLB TV. HLSS took out a 20.56 flat base trigger in 1/25, with volume confirmation coming a few days later on 1/31. Stocks in the group banking gains, pun intended, are OCN NSM. OCN took took out a 39.35 cup with handle trigger on 2/1, with volume showing up today. NSM took out its own 32.10 cup with handle trigger on 1/2, with volume confirmation of its own coming on 1/4.
SLB took out a 78.57 flat base trigger on 1/25. It has been trading tight and digesting its recent move, which is just what you want to see. HAL in the group is trading in the same type of fashion and a buy near the 40 handle seems plausible. Stocks in the group acting well are OII CLB. OII is well past its 57.55 cup with handle breakout on 1/15. CLB, a volatile name, is trading near its double bottom trigger of 133.29 it took out 2/1 on sharp trade.
TV took out a 28.18 3 week tight pivot point on 1/22, with volume confirmation coming on 2/1. The Mexican ETF, continues to be one of the best regional ETFs as it is at trading at all time highs, and possibly will complete its own 3 week tight trigger on Friday’s close. SNI continues to build the right side of its base, and may be putting a handle on its cup base, which is now just 2 days in duration. Remember it must be 5 days long to be considered a legitimate handle.
Stocks that can be bought as they test their 50 day SMAs, after recent breakouts, where big funds look to add to their positions are KEP LCC PWR. KEP took out a 13.88 flat base trigger last year on 12/28. Look for support at its 50 day SMA near 14.10.
LCC took out a 13.85 cup with handle trigger on 1/2. The group has been acting well with ALK DAL trading tightly after nice moves, and even JBLU is resting at 50 day SMA support. Look to enter LCC at 50 day support at 13.75.
PWR took out its own 26.17 flat base trigger last year on 11/6. It is looking to halt a 4 day slide before today on strong trade. Look for a test of 50 day support to enter at 27.60. It must close above that entry to hold the position.
ANN can be bought with a buy stop above its 50 day SMA at 33.
SWKS can be bought with a buy stop above its 200 day SMA at 25. Others that can be bought as they reclaim their 200 days and their buy stops are DVN 58.50, WBMD 17.30, GCO 63.50, UA 52, SE 28.50.
Stocks to be viewed as shorting opportunities are GRMN BLL LULU. Last night we discussed so bifurcation within the steel group with X NUE. Tonight is the navigation plays. GRMN can be shorted on any strength at 50 day SMA resistance at 40. GRMN is mired in its own personal bear market down 25% from recent highs, while rival TRMB is receiving volume confirmation today from its 3 week tight breakout trigger of 63.42 3 week tight breakout 1/25.
BLL has been down 3 of 5 weeks to start 2013. The stock pierced its 50 day SMA on 1/31 following earnings on large trade. Lets look to short this one if it falls back below that line with a sell stop of 44.90, and a close below that level. Competitors OI BMS in the group have the better looking stock charts.
LULU has been down 5 of the last 6 weeks, with each of those 5 weeks finishing in the bottom of the range, not a promising sign. The stock is close to entering its own personal bear market, down 17% from recent highs. Look to short on a test of 200 day SMA resistance at 68.50. Stocks in the group looking much better are URBN BKE.
Summary of triggers:
Cup with handle MTB 105.02.
Cup with handle IMAX 25.06.
Flat base trigger CPB 37.26.
3 week tight trigger MDCO 30.97.
Prior breakout trigger retest HLSS 20.56.
Prior breakout trigger retest SLB 78.57.
Prior breakout trigger retest TV 28.18.
50 day support purchase KEP 14.10.
50 day support purchase LCC 13.75.
50 day support purchase PWR 27.60.
Buy stop trigger above 50 day ANN 33.
Buy stop trigger above 200 day SWKS 25.
Short 50 day resistance GRMN 40.
Short stop below 50 day SMA BLL 44.90.
Short at 200 day resistance LULU 68.50.
The author owns NRG DNKN.