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
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