Stock Picks - Week beginning 12/1/08

Sorry that I won't have any charts for this commentary - I'm traveling and it's a pain on the laptop.

As for the S&P, if the bulls can overtake the 906-916 range, we could see 945 before the week's out. If there is madness on Monday, 960 is not out of the question. However, I think the recent run will make folks itchy to take profits, and we could have a "long squeeze" so to speak - any sign of weakness brings us quickly back to the 835-840 range. In spite of the dip a couple of weeks ago, this chart I provided earlier is still basically intact - http://joeslat.blogspot.com/2008/11/s-500-chart.html. There remains a very low possibility that any good news comes out about anything. Still, if Obama is going to get on the tube every day at 10 a.m., then he is clearly being advised by a trader, and a clever one at that. As long as he can freeze the markets every day, a bottom will likely shape, if for no other reason than exhaustion.

This week, I have picked 8 longs and 2 shorts. I have a bonus short that I won't put in the portfolio, but it seems pretty interesting. I should point out that the target price isn't for the week - it's typically a 25-45 day price target. I will trade these stocks only on the bias below, and only when the intraday chart is moving in the same direction (up or down). Like last week, we're hoping for 1 or 2 to get to their target price this week. One 25% gain carries a lot of losers.

Longs:
GOLD - Randgold Resources - Double bottom, Closed Friday $38.23, $50 target
UTX - United Technologies - Bottom Triangle, Closed Friday $48.53, $63 target
CFX - Colfax Corp, Head & Shoulders bottom, Closed Friday $9.56, $12.40 target
AUY - Yamana Gold - Double bottom, Closed Friday $5.81; $7.50 target
PCG - PG&E Corp, Bottom Triangle, Closed Friday $38.04, $49 target
TNE - Tele Norte Leste ADR - Double Bottom, Closed Friday $14.68, $18.60 target
PEG - Public Services Enterprise Group, Bottom Triangle, Closed Friday $30.90, $39 target
SGP - Schering Plough Corp, Triple bottom, Closed Friday $16.81, $20.80 target

Shorts:
WMI - Waste Management Inc, Symmetrical Continuation Triangle, Closed Friday $29.30, $21 target
PXD - Pioneer Natural Resources, Bearish flag, Closed Friday $20.08, $12.50 target

Bonus:
Short: BKS - Barnes & Noble - this one may not break down this weekend, but if we get a series of bad retail news, this could really tank. Closed Friday @ $15,78, $10 or less for a target.

Also, I would like to give props to this web site - I've met some good folks there and it is a fun chat to trade with: http://www.ustream.tv/channel/daytraderrockstar-show

Joe

Portfolio Performance - Week of 11/24/08

The portfolio finished the week up 2.4%. Interestingly, 6 of 10 were "losers," and 2 of them hit the 10% stop loss. Still, of the 4 winners, three had price improvements of 26%, 19% and 13%. I feel lucky to be up at all this week, with 5 shorts in the portfolio during such a bullish week - it illustrates the importance of risk management.

Working on picks for next week next. I'm traveling, so I won't be trading until Thursday.

Joe

Tuesday - After the close

If you traded all day, you would have thought the bulls were feeling pretty good out there. But looking at the close, the candle's red - we closed below where we opened. Still, we made a higher high and a higher low than yesterday, so "up" it is. Tuesday's high - 871 on the S&P - is a critical resistance for the bulls to tackle. Right on the heels is the R1 (873) and the 20-day EMA (875). If that gets broken, this bear flag might run to 940 before it takes a breath. I actually think that's fairly likely, as the buying has made light of some key resistance on it's way up the last 3 sessions. In fact, if we can get to 940 fast enough, maybe we can turn this into a bottom, but I'm talking two sessions. If it takes more than two, there won't be enough momentum to avoid the vacuum created by those nasty 740-750 low points.

At the low end, today's low, 807, has to be held to continue the bear market rally. In fact, if we get that low, which seems pretty unlikely right now, there isn't much to catch it before we have another historic drop. Just doesn't seem to be in the cards for Wednesday - too many support levels along the way. I think the bears would consider it blood in the water if we just had an inside day, or if we couldn't take out Tuesday's high.

I think the bulls enjoy another 3-5 days of higher lows. Watch for the VIX to drop to 52 as the S&P approaches 940, and then we'll see whether greed or fear wins. I actually think that this is the war, not just the battle - whichever takes the price at that 940 range is going to determine the market direction for the rest of the year.

The portfolio did well today, up another 1.0% from yesterday. Same set of stats, though - 4 winners and six losers (including one that got stopped out). In fact, all the gains have come from ACM, and it's already exceeded it's target price by 3%. If it ain't broke, don't fix it.

On my side, I'm too depressed to add them up right now. I've got to recon the losses I'm carrying on shorts with the opinions above. Curiously, the opinions are mine, and so are the underwater shorts.

Joe

Monday - after the close

Today was spectacular. Just about every chart maintained embedded stochastics for the entire day. Since the portfolio was 50/50 short/long, and every short actually closed up for the day, I'm feeling pretty lucky that the portfolio was up 1.1% for the day. But the fact is that 6 of 10 picks went against, and today's swing was wide enough that some of the trades may be busted.

Unwilling to play the market in front of me, my trades today were mostly on the short side and they mostly did not work out. After finishing last week with a 93% win/loss, today I was 4 for 8, with several underwater shorts carried overnight.

S&P pivots for Tuesday are: R2 - 915; R1 - 861; P - 832; S1 - 798; S2 - 749. If we break the 20EMA to the upside (875ish), 915 seems plausible. Falling below that 832 area puts the bears back in command and the bottom is postponed until at least next year.

Joe

Stock Picks - Week of November 24, 2008

With Friday's violent close, it has been challenging to take a stance on direction for the coming week. It was an inside day, so we simply don't know. With a lot of positive news building over the weekend on BO's plans, a bear flag is in order. Remember, we made new lows on Thursday and lower lows on Friday; this is not the definition of a bottom. The 835 range on the S&P was tested 4 times until it finally failed. We will have to test that 740 range again, but it could be a few hours, days or weeks before that happens.

On the upside, look for the 835-840 range to provide significant resistance. Testing and then breaking off of that range to the downside could be a great time to load up on shorts, because the next stop is likely to be to retest the 740 range. For Monday, 820 will be hard to break - it's a pivot point and also the top of the recent downward trend area. If we develop a bear flag, it will probably be led by technology, precious metals and otehr commodities, so that is where my long picks are focused.

I think 740 always has a chance to be in play, if for no other reason than that we don't know if there are any buyers. On the downside, many of last week's shorts are still worth looking at.

The sort order below is long/short, and then by most favorite to least favorite. Keep in mind I threw out about 30 stocks, so these are all favorites in a sense.

Happy trading.

Joe

ACM - Long

LONG - AECOM Technology Corp - ACM - Friday this broke up out of a bullish pennant. The 20EMA is sneaking up on the 50EMA, as the price has broken upwards through both over the last eight sessions. TARGET PRICE $26.00

ABX - Long

LONG - Barrick Gold Corp - ABX - Friday this was up 20%, and that turns a lot of indicators favorable quickly, but there appears to be plenty of upside. $24 would be a great entry, but waiting for it might keep you out of the trade. TARGET PRICE $34.00

ETR - Long

LONG - Entergy Corp - ETR - This broke out of a bottom triangle and looks poised for a nice run up. TARGET PRICE $110.00

GFI - Long

LONG - Gold Fields Limited - GFI - A big move on Friday makes this terrific technically speaking. Would love to grab some at $6.40. TARGET PRICE $9.50.

VR - Long

LONG - Validus Holdings LTD - VR - Working it's way up through the 50-day EMA and breaking up out of a bottom triangle. TARGET PRICE $27.00

BGG - Short

SHORT - Briggs & Stratton Corp - BGG - This broke down out of a descending continuation triangle and I will be shorting it every time it hits $12.50 as it backtests. It just won't stick. TARGET PRICE $4.50

SII - Short

SHORT - Smith International Inc. - SII - This broke down out of a descending continuation triangle and is backtesting the $23.50. Watch for some consolidation around that range and volume to get weak, then it goes down. TARGET PRICE $7.00

ISIS - Short

SHORT - Isis Pharmaceutical - ISIS - We might be a little late to the party, but if this runs up to backtest, $11.00 - $11.50 is a good range to short. Technicals are really ugly, but a true backtest would be about $13, so there is a risk/reward concern here based on current & target price. TARGET PRICE $7.50

HSY - Short

SHORT - Hershey Co - HSY - This wasn't in last week's portfolio, but I made some good money shorting it any time it hit $34.50 - 35.50. I don't see how this holds $34 for long, but if it breaks above the 20EMA, then this short is broken. Right now, though, it looks good. TARGET PRICE $29.00

TRA - Short

SHORT - Terra Industries - TRA - Last Thursday, this broke down out of a descending continuation triangle and spent Friday backtesting. If it breaks below $11.20 it should tank. In the meantime, backtesting the $12.50 range is an acceptable short entry. TARGET PRICE $5.00

The Week's Portfolio and Trading Results

The rally today gave a little back, but the portfolio did nicely for the week - up 17.7%. Pretty good in comparison to the market. It was a good week to be short.

As for me, I closed the day all cash again. Actually, I was out about 2:30 just before the rally, which was a good thing. For the week, my trading record was 62 wins, 5 losses (10 and 0 today) for a 15.7% return. I'm surprised and amused that I didn't even beat the portfolio - that will be fun to watch over time. The portfolio does have one calculation flaw - it assumes entry at the prior close, and sometimes the stocks gap open, meaning that the prior day's close was never a valid entry point.

Keep an eye out this weekend for next week's picks - the daily chart tells us to stay bearish even though it looks like we're setting up a bear flag over a few to several trading days.

Questions/comments, please feel free, I'd appreciate the feedback.

Trading plan for today

I'm focusing on good SHORT entries for the following equities, in order of preference: SII, ANR, AIV, LM, MS, TRA, EGLE, UBS, TEX, AET, PCU. (See below)

I'm going to watch the SKF (ultra-short financials). They're going to lead today's rally, and so they'll fizzle out before anything else does. I'll probably day-trade SKF and the SDS (ultrashort S&P) while I wait for good entries on the shorts. Why ultra-short and not ultra-long? Well, if it gets away from me, I just hold it. It's gonna come down sooner or later.

Joe

New Short Picks

My brother thinks I should be giving out one or two new picks a day. I look for them, so, no problem. I trade many more positions than what we talk about here, sometimes I list them all briefly, but the list is only good for the day unless I'm talking about the "portfolio," which is static unless I say otherwise. These two picks are not portfolio changes, just stocks I'll be trading today if they pull back and give me a good entry.

What I like about these stocks is that you can hold your shorts overnight and rest assured that you'll make some money in this market. If they run away from you, I suggest an 8% stop loss, or something smarter like if it crosses the 20-day average. I don't like talking about stop losses, and I haven't been stopped out once in two weeks.

SHORT - SII - Smith International - Watch for it to backtest the $24.50 area and start a short position there. Add to the position when it crosses back down over $22.50. Good scalp potential any time it hits $24 (as a short. The 20-day EMA is about $29, which would be a 20% stop loss, so lag in. TARGET PRICE $7.

SHORT - BGG - Briggs & Stratton Corp - This broke down technically yesterday, but an up day today might give us an oportunity. Look for a backtest in the $12.40-$12.60 range and short it there. The 20-day EMA is about $13.90, so maybe a stop loss at $14. TARGET PRICE $4.50.

Futures up 4.6%. Gonna start loading up new shorts today. :)

Be sure to read the long post below (S&P 400...) when you get a chance. You'll develop more nerve when your bullish instincts start making you question your short positions.

Joe

S&P 400 - It's not a Typo or a NASCAR Race

I'm going to walk you through some charts that will demonstrate that we are most likely going down, far, from here. The futures are up 4% overnight, and that has no bearing on this interpretation - up days will happen.

We're going to drill down into the daily chart of the S&P 500 futures above. All I want you to take note of above is the red trendline from June/July, and then I'll walk you through why we're going down, not up, from here.

The first chart highlights the daily full stochastics.

First, notice that the stochastics suggest that the S&P is getting oversold. However, then haven't really turned over to suggest flattening from here. If you look at the last time the stochastics were this low in early October, that was the period where we began to develop the descending triangle that we blew out of on Tuesday. Also, take a look at how the stochastics made new highs on November 5th/6th, as compared to August 12th, September 2nd and September 24th. Note that on all three comparisons, the November 5th/6th price was lower while the stochastic was higher. This is bearish and foretold the drop you can see on the chart from November 5th to today, which doesn't look like much because of the scale, but that drop was 25%.

In order for this chart to develop a bullish divergence, the current stochastic line has to go "not as low as" the bottom on October 9th/10th. It probably will go lower, and I'll show you why below. Just take away from this chart that we're getting oversold, but we could stay oversold for a while before an extended pullback, and that the last "pullback", from October 28th through November 5th (where the stochastic line goes way up) produced a 20% bear market rally (where stocks go up for a while before they resume their bearish downward trend).

Now let's look at the MACD.

The MACD "crossed over" (the blue line crossed the orange line) in a meaningful way on November 19th. The last time it did that was September 5th. That started a precipitous run from 1,246 to 837 - about a 30% drop in 35 days.

Let's look at RSI.

The RSI is bouncing around 30 - crossing below 30 is considered bearish. The little bump up over 30 is the overnight trading for today's session. Take away from this chart - you see there are no RSI values above 70 over the last six months, and several periods where it is below 30. This told us that "down" was more likely than "up," even when we had little rallies like late October. If it doesn't cross 70, it isn't a real rally. Using divergence, if it doesn't cross that recent peak of about 60, the bottom is definitely "not in."

Now look at Aroon.

I don't hear day-traders talk about Aroon, probably because it tends to be a pretty late indicator. But typically the Aroon cross is highly confirmatory when used with other indicators. If you wait for Aroon to cross, you might be a little late to the party, but it signals greater confidence that the trend will continue. On this chart, you'll see the yellow circles where the red Aroon line crosses the green, which is bearish. It happened September 2nd, and again November 13th. You could say that Aroon called the fall from 900 to 750. It doesn't tell you how far it will go, but as long as those two lines are both pointing down, going down is the plan.

Last two - PPO and Williams%

The PPO has to cross zero to become bullish - the last time it did that to the upside was early August, and it didn't cross with conviction, as it went back below in early September.

The Williams% has to cross -50 to become bullish. You see it is more jerky, so it is important to look at other indicators as well.

Let's put them all together. In early September, we had a bearish cross of Aroon and PPO, and Williams% spend more time under -50 than over, and RSI never go near 70. Today, stochastics are bearish showing no retreat, Aroon is bearish, PPO is under zero and getting lower (bearish), MACD crossed downward (bearish), RSI is dancing around 30 (bearish) and Williams% is well below -50 (bearish). There isn't a single bullish indicator right now. From the charts, it looks a lot like the beginning of September, and we're down 40% since then. Another 40% from here puts us at, say 400-450 on the S&P?

So, today the portfolio is gonna get killed because it's all short and the futures are now up 4.4%, but I'm all-cash. So, I'll be looking for new entries on the short side after the rally gets weak. One suggestion that I'd make would be to start shorting anything on the pick list if it gets to it's recent high (since last Friday) and add more shorts if anything gets to it's 20-day EMA. If you average in on those two price-points, you'll have a nice gain the next day the market tanks. And it will. If nothing else, we have new lows to test now (fun!), and new lows get tested at least 3 or 4 times over a period of months before you can declare a bottom. You haven't seen the last of 750 on the S&P. (But you probably have seen the last of 900.)

Joe

Yesterday's Action

I'm going to do a couple of updates this morning, sorry if you've subscribed and that creates a bunch of spam.

Take a look at the chart above and notice that about 30-40% of companies listed on the big exchanges hit new 52-week lows yesterday. I think it was in the 600's the day before, and the 300's the day before that. We may take a breather from the collapse today, but we have a long way to go yet before anyone should be using the term "bottom."

The S&P futures are up 4% and climbing. I'm so glad I finished the day all-cash.

Wednesday's trading recap

The market's not closed, but I'm done. Today, I was 14 for 14 on my trades and realized a 3.1% account growth for the day. I probably would have done worse if I didn't have to leave the house for a few hours; I think there is a lesson in that.

Through 4 days this week, I have 52 wins, 5 losses with 14.2% account growth. :)

I'll update the portofolio statistics tonight (right now the portfolio is up 19.6% for the week but the market is still tanking), and I might move some picks in/out of the portfolio as well.

Joe

Update for Thursday's Open

(Click the chart to make it bigger)

Today, the S&P futures stayed in this severe downward channel, so that's my story and I'm sticking to it. Although the channel runs up to 845, the 834 range is gonna be a hard resistance point - it took us 5 weeks to break it when it was support. The channel runs all the way down to 760. Pivot points are: R1 - 851; P - 828, S1 - 789 and S2 - 766. So, 760-835 has a lot of reasons to be the boundaries for tomorrow.

Picking shorts in a bear market

I've gotten some comments about how easy this must be, the market is down, so pick shorts and you'll win, but if we have an up day, you'll lose. The comment presupposes that there is unanimity as to whether it's a good time to buy or sell. But I see many people buying in this environment because they think this is a great time to buy. Maybe it is, but these people are traders, not investors. So, if you think this is a bottom and you want to invest, go for it. So far, you'd be wrong. I think the market is going down further, so that's how I approach my stock picks. If you day trade, you can probably make money going long or short on any stock. But if you have the discipline to only day trade with the wind at your back, whipsaw is less likely, or less severe, or shorter. You can stick with a trade longer because we have higher confidence that the prevailing wind will ultimately prevail.

I pick stocks that have intermediate price targets in the direction of the market. If I guess the direction wrong, I'm hosed for a few days, they that goes into the determination of the next direction. (Right now the S&P is dropping below 807 in aftermarket, so I'm guessing "lower" for tomorrow.) With this volatility, though, it's almost like we have 3 sessions a day - either one long and two short, or one short and two long - so keep your powder dry and wait for the turn. If you were die-hard long today you had like a 3% chance of picking the right stock. So guessing the direction right is more important than picking the stock.

Anyway, I'm all shorts and I made money, but the market went down so it's gotta be easy, right? The S&P closed Friday at 872 and it closed today at 809, a three-day loss of 7.2%. My picks over the same period are up 14.8%, that's more than double the market. I don't know how much is luck and how much isn't, but if the magic formula was just to be short on bad days, you'd think my return would have been closer to 7.2%. I'm sure I'll eat humble pie soon, but just not this week so far. :)

Portfolio Changes for Thursday

For Thursday, I'm removing the following shorts from the list since we've harvested enough potential from the picks: ISRG, CCK, and JBHT. I also don't want to play with GGB because the price is under $5 - I like to see dollars not pennies. Kept in the portfolio are: ANR, AIV, BK, CMA, MET, MS, PCU, and UBS. Each of these has at least another 60% downside in the stock price so I like the odds.

To keep the number to 10 securities, I'm adding the following to the list:

TRA - closed $13.39, target $5

LM - closed $14.00, target $5

TEX - closed $10.21, target $4.50

Honestly, I looked for longs, I do, there just isn't anything that is technically appealing. We've had a lot of up days lately (well, a few) and they all were in fact down days for most of the stocks in the index. Tuesday was saved by Home Depot and Chevron (I think). It just isn't a bottom when everything else goes down. Check this out: http://finance.yahoo.com/advances 826 Nasdaq-listed companies saw new 52-week lows today. Yesterday, an "up" day, we had over 600. Last week, the numbers were from 100-300/day. You'll know the bottom when you see it - this number will get smaller and smaller. In the meantime, we're bears.

Remember, I daytrade and/or swingtrade these. They are the most likely to go down hard when the market is going down. But if I hold a bunch of shorts all at once overnight, a good day is the market is a bad day for me. So, I look for good entries only on the short side on these, then I hold them until they make me money. Be patient and pick a good entry.

There are a bunch of other good shorts if you are interested: X, KGC, WLL, FTI, MOS, TROW, EGLE, AA BUCY.

Tomorrow it looks like financials will continue to lead us down, followed by energy. Oil is down another $1 in the aftermarket. There really is no motivated money on the sidelines after we crushed 834, which took 5 weeks. It's too close to the end of the year for anyone to risk anything, that's my guess. We probably break 700 before Christmas.

Today's results - after the close

Wow, what a day. Should be interesting tomorrow. It was clear that the buyers at S&P 835 have run out of money (or hope). Wait till people get home tonight and call their brokers.

Including ANR, added this a.m. (7.5% gain today), the portfolio is up 14.8% since Monday's open. Worst performer is CCK (up "only" 6.6% in three days), leading the pack is AIV (26.4% gain).

In my trading account, I was 13 wins, 2 losses. The two losses were both ad-hoc, I gotta control myself. Gain for the day is a whopping 12.7%. For the week, I'm batting .884 and up 9.3%.

Joe

Stocks I'm tracking today

Summary of stocks I'm watching today:

Shorts - AA, AET, AIV, ANR, BK, BUCY, CCK, CMA, EDU, EGLE, FSYS, GGB, HSY, ISRG, JBHT, MS, PCU, UBS

Longs - Only looking to scalp longs. FSLR, FWLT, MON, OIH, POT tend to cooperate.

New Short - Alpha Natural Resources (ANR)

ANR hit a new 52-week low yesterday of $19.20 and is threatening a downward break out of a top triangle. Yesterday was a volatile day, with a trading range of almost $5. It's dropped $10 in three sessions and $16 in two weeks. It would be great to see it backtest $20 and fail on the way down. Intermediate price target is $5.

Alpha Natural Resources, Inc. produces, processes, and sells steam and metallurgical coal in the United States. It also involves in the purchase and resale of coal mined by others. The company�s steam coal is used as fuel for electricity generation; and metallurgical coal is used to make coke, a key component in the steel making process. As of December 31, 2007, it owned or leased total proven and probable coal reserves of approximately 617.5 million tons. As of the above date, the company had 8 regional business units that were supported by 32 active underground mines, 26 active surface mines, and 11 preparation plants located in Virginia, West Virginia, Kentucky, and Pennsylvania, as well as a road construction business in West Virginia that recovers coal. The company was founded in 2002 and is based in Abingdon, Virginia.

Tuesday's trading results

The ten picks over the weekend plus MET, recommended pre-open today are up 4.4%. I suppose if I gave out rules they would have included a stop loss on HIG. If we used a 10% stop loss, the week-to-date return would have been 5.6%. Would like to get some comments if you are interested. I'm new at this so be gentle.

As for my actual trading, I was 8 for 8 with a total return on cash of 3.6% I layered some puts on top of my shorts and it cranked the returns. Through Tuesday, I'm up 5.9%. I'm up 10.3% for the month of November so far, with a 63% trade win rate.

I see we've had a great run up from 825 to 864 going into the close on the S&P, so that will hopefully set up some re-entry for shorts tomorrow.

Joe

Tuesday pre-market

(Click on the chart to expand)

Look for an S&P 500 trading range with 834 as key support. As of this writing, the futures are at 833.5 (the last candle is today). If the trendlines hold up, the range today is bound between 790 and 875. 20EMA is about 915 and upper trendline within the descending triangle is about 970. Note that stochastics are not yet oversold and MACD crossed yesterday.

It feels like we'll go lower today, led by financials, real estate and technology. Hope we go up so I can load up on my shorts again.

MET - Metlife

Today, Metlife (MET) closed below the support line and had a MACD cross. Look for it to go lower in the coming days after retesting the $25 mark. I'll add this to the portfolio after retest. Target $10.

Monday trading results

Saturday's picks created a 2.7% return today. Truth be told, fairness made me put a long at the end of the list, but I wouldn't have otherwise. Return today would have been 5.6% without HIG.

I also traded around AET today as it ran up. Got out too early, but a W is a W. Counting closed positions only, my record today was 17 wins, 3 losses with one-day account growth of 2.3%. All three losses were hedges using SSO or SDS when I got nervous things were going against me. I gotta stop doing that.

Aetna (AET) - Up or down?

One of the few stocks that was up last Friday, maybe it takes a shot at the 20ema. It broke free of the trendline, so is that a failed backtest? If it shows any weakness, target price $7-10.

Stock Picks - Week of November 17, 2008

It’s a bear market so most of the picks are shorts. Some of last week’s long picks had their runs (ACH, CXG), but they closed the week below the week’s open.

Market assessment: The same pattern is building in many securities, and the Dow and the S&P are following it as well. The low on October 10th, and the ensuing test of low on October 24th and November 11/12 has played out in most securities. When this pattern breaks down for the first wave of stocks this week, it will likely pull the indexes down right behind. The picks for this week are the leaders down out of descending continuation triangles, descending symmetrical triangles or rising wedges. The chart below suggests that the S&P will give up the 900’s for the last time in a long time by Thanksgiving.

S&P 500 Chart

Apartment & Investment & Management Co (AIV)

The daily chart shows that it has broken down out of a symmetrical triangle. On Thursday, it backtested the top of the triangle (and the 20EMA) and failed. If we get a rally this week, let’s see if it fails to cross up over the lower line around $13.50-$14.00. Looks like a good short out of the gate at $12, since it took out the prior day’s low. If it either breaks quickly down below $12, or recovers to $13.50 and fails to re-enter that triangle, it’s a good short @ $13 (and buy some puts). Watch for it to take out Friday’s low $12.09, then the 52-week low of $10 is a first target. Based on the height of the triangle, mid-term target price is $4-5. I think it will not get much above $13 on the rebound and it’s $10 or lower by the end of the week.

AIV Chart

Bank of NY Mellon Co (BK)

Pretty much the same pattern. The daily chart shows that it has broken down out of a rising wedge. On Thursday, it backtested the top of the wedge (and the 20EMA) and failed. If we get a rally this week, let’s see if it fails to cross up over the lower line around $32. See how the upper trendline from the last two sessions intersects with the wedge right at $32. If it either breaks quickly down below $28, or recovers to $32 and fails to re-enter that wedge, it’s a good short @ $30 (and buy some puts). Watch for it to take out Friday’s low $29.73, then Thursday’s low of $28.14. Based on the height of the triangle, mid-term target price is $10. I think it will trade down into the $21-26 range by end of week.

BK Chart

Comerica (CMA)

Pretty much the same pattern. The daily chart shows that it broke down out of a symmetrical triangle on 11/9. If we get a rally this week, let’s see if it fails to cross up over the 20EMA or the trendline from the last four sessions, say about $24. If it either breaks quickly down below $20.40, or recovers to $23.50 or so and fails to break above the 20EMA, it’s a good short @ $23 (and buy some puts). Watch for it to take out Thursday’s low of $20.40. Based on the height of the triangle, mid-term target price is $15. I think it will trade down into the $18-19 range by end of week, but if it crosses the 20EMA up, all bets are off for another two weeks (it will go back up to the $26 range and get really interesting to short then).

CMA Chart

Intuitive Surgical (ISRG)

The daily chart shows that it broke down out of a descending triangle on Thursday, setting a new 52wk low. If we get a rally this week, let’s see if it fails to cross up over the 20EMA or the trendline from the last four sessions, say about $155-165. If it either breaks quickly down below $144, or recovers to $155 or so and fails to break above the 20EMA, it’s a good short @ $144 (and buy some puts). Based on the height of the triangle, mid-term target price is $70-85. I think it will trade down into the $120-130 range by end of week, but if it crosses the 20EMA up, all bets are off for another two weeks (it will go back up to the $175-180 range and get really interesting to short then).

ISRG Chart

Crown Holdings Inc (CCK)

Similar pattern, but might have another rally up to $18.50 (top of triangle, 20ema) before heading back down. If it either breaks quickly down below 52-wk low of $15.40, or recovers to $18.50 and fails to pass the 20ema, it’s a good short (and buy some puts). If this takes out $15.40, watch out – it could be a quick ride to the target of $10-11.

CCK Chart

Gerdau S.A. (GGB)

I don’t love this chart, but if that upper trendline holds up as resistance, it is a great time to get in. Short @ $6.50 or when it takes out Thursday’s low of $5.48.

GGB Chart

JB Hunt Transport (JBHT)

Watch on Monday, something has to give. If the upper trendline holds and then it breaks down through Thursday’s low, and then the 52-week low of $23.12, it tanks. Target $13-15.

JBHT Chart

Morgan Stanley (MS)

A lot of financial institutions are in this pattern right now, so I’m a little nervous to play them all at once in case the sector rallies because of some news event. Watch indicators and look for a short entry. $10.77, $10.15 and $6.71 are the three most recent lows, and the last is the 52-week low. If it breaks above $13.35, then it failed the backtest. From there, watch the 20EMA and the top line of the triangle to re-assess short opportunity.

MS Chart

Southern Copper Corp (PCU)

The daily chart shows that it broke above then below the 20ema. This may take another couple of weeks to form if it bounces off the bottom of the wedge and heads back up. If it breaks below $11.97 (Thursday’s low), it could go to $11 quickly before hitting support. 52 week low is $9.13. If it stays in the wedge, and holds the $16 top end, then it’ll have another chance to tank through the bottom, perhaps Friday. Note that it closed at the low-of-day, so it probably has to backtest before it is confirmed.

PCU Chart

Union Bank of Switzerland (UBS)

Notice that this is another financial. This looks like it broke down on Friday. Watch this at the open and see if it starts to tank right away. There is still the possibility that the weekend gives it a chance to get back into the descending continuation triangle, in which case we have 1-2 weeks to hit the price target of $2-4. Watch $12.25 for entry back into the triangle (which requires some waiting thereafter), or any pressure to get below $11.50 (where it will tank).

UBS Chart

Hartford Financial (HIG)

OK, maybe there is a long or two in here since the market is likely to be up this week. If HIG can pick up speed, maybe it blows right through the 20ema. Target price is $22-24. The 50ema is at $30 right now. However, it if goes to $10 again, it starts looking like a short.

HIG Chart