Markets stayed underwater all day, but closed near UNCH . The Nasdaq remains a little shy at the big round number of 3200, yet a look at both the daily charts of the Nasdaq and S&P 500, show the last 5 days closing at or near their session highs for both benchmarks. Displaying muscle, yet will they fatigue soon? Today we saw 3 week tight breakouts from FUL and AB. They took out triggers of 40.28 and 20.91 respectively. Would have liked to have seen a little more volume with AB. Just as important as breakouts, are how the individual names that do break out, are how they perform post breakout. Remember, the best ones work out right away. Today NTI TWI both of which broke out Friday, behaved just how you would like to see. They moved higher in strong trade today by both around 2%. NTI did reverse but closed with a decent gain. I like to discuss the importance of letting the specific breakout triggers I provide confirm themselves and not to front run the pivot. Some recent examples are DSW CERN. Friday DSW came within 2 pennies of taking out a 69.42 cup with handle trigger and reversed to close about a dollar lower. Today it fell another 1%. CERN came within .09 of breaking through its own 88.42 flat base trigger as well Friday. Today it lost almost 1%. Looking through a bunch of charts that I do each night, and throughout the trading day, was thinking this could be the year of the spin off outperformer. Keep an eye on COP’s spin off PSX, TYC’s spin off ADT, and PFE’s spin off ZTS, and buy them on weakness.
Stocks that can be bought as they take out the following specific trigger in firm trade are cup with handle KRFT 47.69.
Flat base is ECL 74.84.
3 week tight triggers are PLL 69.15, STT 56.94.
Other cup with handles are NRGY 20.54, GPN 50.83, MTB 105.02, SWK 78.49, JAZZ 58.09, IRM 34.75, BHP 80.40, SPLK 35.08, G 17.10, IPI 24.15, OIS 79.14. Other flat bases are VR 37.73, CBD 49.18, KORS 58.72, CFR 60.31, HMC 39.45. Other 3 week tight triggers are K 59.48, CNH 48.86. 4 week tight triggers are DHR 61.59, MDCO 30.97, PH 94.91.
Stocks that can be bought as they retest prior breakout triggers are FLWT MOS ENOC. FWLT took out a 24.83 flat base trigger on 1/4, with volume confirmation coming a couple of weeks later on 1/27. Stocks in the group performing well are CBI JEC FLR. CBI is trading very well above its last breakout of 47.84 from a flat base trigger on 1/15, with volume confirmation coming 2/4. FLR is trending back toward its prior double bottom with handle trigger of 60.06 it took out on 1/2. FLR’s 50 day SMA is near their to provide some extra comfort.
MOS took out a 60.16 cup with handle trigger on 1/24. The ag group has been performing well as of late, although their is some bifurcaton if you look within the sector. CF is still above its 219.88 cup with handle trigger it took out on 1/22. AGU is trading tightly above its 108.52 flat base pivot it took out on 1/22, with volume confirmation coming the following session. RNF lost 4% last week, and is having a tough day today down 5%, and closing in on its prior flat base trigger of 40.59 it took out on 1/7.
ENOC took out a 14.61 flat base pivot on 1/15. It trades a bit on the light side, but solid bids seem to appear whenever the 15 handle is tested, so I can not fault those who would try to buy closer to 15. The company does work with smart grids, which will see some investment most likely going forward, considering the aging of that infrastructure. AME is trading very tightly in the group at all time highs.
Stocks that can be bought as they take out their 50 day SMAs and their buy stop spots are SBAC 70.25, EVER 14.90. Others that can be bought as they reclaim their 50 days are MKC 64.30, CCI 71.45.
Stocks that can be bought as they take out their 200 day SMAs and their buy stop spots are ROST 62.50, BIG 33.50. Others that can be bought as they reclaim their 200 days are TSU 22, CMG 327, WBMD 17.10, SWKS 25.
One strategy I like to utilize during earnings season is, purchasing a security after its reports earnings. It must be a leader, and I buy it as close, or precisely on the 50 day SMA, following the report. Examples of this occurring were last week with CFX on Wednesday, ODFL HLSS IT on Thursday, and BECN RSG on Friday. They all caught preicse 50 day SMA support. Two reporting tomorrow which I will be viewing closely are VAL SCI. VAL last took out a 59.91 flat base trigger on 11/20/12. Look to see if it falls after the release, and buy some if 50 day supports hold at 64.25.
SCI last took out a 14.58 flat base trigger on 1/17. Look for 50 day SMA support to hold at 14.50, should the stock sell off post earnings.
Stocks to be viewed as shorting opportunities are TKC. TKC has lost 10% during the last 2 weeks on January, losing its 50 day SMA on 1/30, falling 7% on big trade. Some foreign telecom plays are doing fine like an SKM VIP MBT BT, whereas some in the group are trading poorly. CHL FTE fit that bill. When leaders separate themselves from the laggards look to short the weakness, TKC can be shorted at 50 day SMA resistance at 16.20.
FMC last took out a 58.80 cup with handle trigger 0n 1/2. Trade was unimpressive on the breakout, a red flag, and it continued to gain modestly on light trade as well. The stock lost almost 3.5% on 2/7 in more than double average daily volume, after an ill received earnings report. It is nearing 50 day SMA support but the velocity of which it is experiencing as it moves towards that support line is troublesome, especially the volume. Lets short some on a break of the 50 day with a sell stop of 58.65.
EFX last took out a 49.59 flat base trigger on 10/15/12 with volume confirmation coming the following day. It lost 6.5% on enormous volume on 2/7 following a weak earnings report. It did receive precise 50 day SMA support, but fell below it the following day. Lets look to short this one on any strength back to the 50 day line, which should now offer stiff resistance. It is similar to the BG play we discussed last night which rallied into 50 day resistance today and sold off.
Cup with handle KRFT 47.69.
Flat base ECL 74.84.
3 week tight trigger PLL 69.15.
3 week tight trigger STT 56.94.
Prior breakout pivot retest FWLT 24.83.
Prior breakout pivot retest MOS 60.16.
Prior breakout pivot retest ENOC 14.61.
Buy stop above 50 day SMA SBAC 70.25.
Buy stop above 50 day SMA EVER 14.90.
Buy stop above 200 day SMA ROST 62.50.
Buy stop above 200 day SMA BIG 33.50.
Purchase at 50 day SMA VAL 64.25.
Purchase at 50 day SMA SCI 14.50.
Short TKC 50 day SMA resistance 16.20.
Short FMC on 50 day SMA break at 58.65.
Short EFX at 50 day SMA resistance 55.80.
The author owns NRG DNKN ADBE.