Markets reveled in a strong week as the Nasdaq rose almost 3%. That was the tech benchmarks second largest weekly gain in 2013, behind the massive 4.77% gain seen during the first week of the year. Perhaps a nascent rotation into tech names is upon us. This week saw bellwethers YHOO ADBE gain 6 %and 4% respectively. Lets look for the index to close above the 3300 level first. The S&P 500 had a strong week as well, and a close above 1600 would be very inspiring. A look at its daily chart shows it days where it advanced on strong volume non existent for more than a month now. Its 50 day SMA lies near 1540, and I would not be surprised to see that level tested in the near term. The markets do however continue to climb the “wall of worry”. Recently we have seen lethargic retail sales (blamed on the favorite cold weather excuse), a poor jobs number, small business pessimism, consumer sentiment fall, etc. Some positives can be oil, which fell more than 2% this week, following last weeks 5% slide. That may offset payroll tax increases for consumers at the gas pump. Interesting was oils move without a strong dollar this week. The UUP is resting right at 50 day support here, and maybe is ready for a rebound, given that the FXE is right at 50 day resistance. The old adage “Do not fight the Fed” continues to reign supreme.
Stocks that can be bought as they retest prior breakout triggers are PEP HSY V. PEP closed one penny above a 79.98 3 week tight trigger it took out on Wednesday, without much volume, but the stock gravitated to close right at that pivot point last couple days. More impressive was the shrug off of the Davenport downgrade Friday morning. The stock on the weekly chart demonstrates very tight trading as well, with only 3 down weeks in 2013. And they were very minimal. Week ending 2/8 it lost .07, 3/15 .16, 4/5 .52. Infact there has not been a big volume down week since the week ending 12/21/12. Main rival KO is nicely ahead of a cup with handle trigger it took out on 3/20.
HSY, is another in the food/beverage group, that recently took out a 3 week tight trigger. It did so on 3/20, taking out an 85.60 pivot point. HSY has also only been down 3 weeks thus far in 2013, and it has not had a weekly decline in above average trade since the week ending 10/26/12. Make what you want of the noise being made of how the defensive groups like staples have held up the rally thus far. The trend is your friend and this group has its share of winners as KRFT still has a legitimate 52.61 3 week tight trigger. Its spinoff MDLZ looks good. Stocks like CPB GIS are both trading at all time highs as well.
V took out a 162.87 flat base trigger on 3/25. It did so days after briefly falling below its 50 day SMA. The breakout came in very healthy trade, and weekly volume was robust as well. The stock was downgraded Friday by Stern Agee, and fell nominally. For some additional comfort the stocks 50 day SMA lies just below near 161. The credit card group has been charging ahead recently, pun intended, with members MA DFS AXP all behaving well. COF seems to be the main laggard in the group and has been stuck below its 200 day SMA since the third week of January.
Stocks that can be bought as they test their 50 day SMAs after recent breakouts include STT FR AXP. STT took out a 3 week tight trigger of 56.94 on 2/13. The stock has traded quietly since then and hails from the strong fiance group. Look for 50 day SMA support to hold if tested at 57.95.
FR, hailing from the strong REIT sector, last took out a flat base trigger of 13.91 on 12/20/12. Look for bids to come forth if the 50 day SMA is tested at 16.35.
AXP most recently took out a 61.52 flat base trigger on 2/7. This one is certainly a best of breed name in the credit card sector and a move to test the 50 day SMA at 64 should be purchased.
Stocks that can be bought as they reclaim their 50 day SMAs and then added to through valid bases that develop are VAL ARMH. VAL can be bought as it reclaims its 50 day SMA with a buy stop of 63. This further sets up flat base trigger of 68.52. VAL’s prior 59.91 flat base trigger from 11/20/12 was retested 4 times in April thus far and held.
ARMH, one of the creme of the crop semiconductor plays, can initially be bought with a buy stop as it recaptures its 50 day SMA at 42.35, which sets up a flat base with a pivot point of 44.57 that can be added to. If tech can somehow join the fray, specifically semis, this one can get some legs.
Stocks that can be bought as they take out the following specific triggers on firm trade are flat bases A 45.76, JWN 58.54, F 14.40.
Double bottom is HAL 42.74.
Stocks that can be viewed as shorting opportunities are AMTD FLR EMR. AMTD is still ahead of a strong cup with handle trigger breakout of 17.34 it recorded on 1/2, with big volume coming in to confirm on 1/4. However the stock has started to show some distribution ever since it made nearly 2 year high intraday of 21.56 on 3/14 and reversed. The stock pierced its 50 day SMA to the downside on 4/3, and has made a meager volume attempt to recapture it. This week the stock recorded an inside week, after the previous weeks 6.3% decline. Rival SCHW has the same type of pattern. Lets look to short AMTD with a sell stop of 19.70 as it surrenders 50 day support. To hold it it must CLOSE below that pivot.
FLR looked beautiful to kick off 2013, with a double bottom with handle breakout on 1/2 from a trigger of 60.06. Great example of why you can never fall in love with a stock, no matter how sweet the breakout looks. The stock closed just above that pivot point on Friday. No coincidence as the stock has retested that 60.06 pivot 5 times since the breakout (2/26, 3/1, 3/4, 4/5 and Friday), and held every time with the exception of 3/4 when it closed a mere .03 below it. The stocks daily chart shows plenty of distribution since 2/20 after an earnings miss. Lets look to short this below that 60.06 pivot, with a sell stop of 59.70 with a move to the 200 day SMA likely near 57. Remember it must CLOSE below the pivot to be held.
EMR was on my radar for a possible long as it reclaimed its 50 day SMA Wednesday but did so on tepid volume. I gave it the benefit of the doubt as it now had a valid double bottom base with a 57.94 double bottom trigger. This demonstrates the flexibility we must have as traders, being nimble and able to change our minds rapidly if necessary. EMR fell back below its 50 day SMA Thursday and continued its downward momentum Friday losing 1.5%. It is starting to lag peers in its group like GE HON which are less than 2% off their recent 52 week highs as EMR trades at almost 5% off its. Lets look to short EMR on a move back to 50 day SMA resistance at 56.75.
Buy at former trigger retest PEP 79.98. Stop following posted entry 77.85.
Buy at former trigger retest HSY 85.60. Stop following posted entry 83.45.
Buy at former trigger retest V 162.87. Stop following posted entry 158.35.
Buy at 50 day SMA STT 57.95. Stop following posted entry 56.60.
Buy at 50 day SMA FR 16.35. Stop following posted entry 15.80.
Buy at 50 day SMA AXP 64. Stop following posted entry 63.15.
Buy stop above 50 day SMA VAL 63. Stop following posted entry 61.30.
Buy stop above 50 day SMA ARMH 42.35. Stop following posted entry 40.65.
Flat base trigger A 45.76. Stop following posted entry 43.85.
Flat base trigger JWN 58.54. Stop following posted entry 57.10.
Flat base trigger F 14.40. Stop following posted entry 13.45.
Double bottom trigger HAL 42.74. Stop following posted entry 39.75.
Sell stop to short below 50 day SMA AMTD 19.70. Buy stop following posted entry 20.45.
Sell stop to short below prior trigger FLR 59.70. Buy stop following posted entry 60.55.
Short at 50 day SMA EMR 56.75. Buy stop following posted entry 58.25.
The author is flat.