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Weekly Wizards

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Nothing Bearish So Long as 50 DMA Holds

Thu, Nov 19 2009, 06:05 GMT
by Mike Paulenoff, Jack Steiman, Harry Boxer

AdviceTrade.com

Harry Boxer, On a Dozen Charts to Watch (TheTechTrader.com)

Today I'm going talk about several stocks on the long side that had significant movement on Tuesday. One of them is A-Power Energy Generation System, Ltd. (APWR). The kind of rising wedge or coil it was in was broken Tuesday with a price-volume surge and breakaway gap after a contract announcement today.

This stock had a significant breakout to new nearly 6-month highs, and is about to test that area in the 14 1/2 zone or thereabouts. Next resistance beyond that range would be 18 1/2, then something around 20, but that's a ways down the road.

Sourcefire, Inc. (FIRE) had a pop Tuesday that took it out across its declining tops line and above the earlier November high to a new high for this month. It appears that with the volume starting to pick up over the last couple of sessions we may start to see some kind of upside follow through.
The chart shows a beautiful rising channel that calls for a move into the low 30s, eventually, if it can get through the spike high it had at the end of October when it reached up towards the 24+ area.

Telestone Technologies Corp. (TSTC) has had a great long-term rising channel for the last 8 or 9 months. The top of the channel measures in the 21-22 zone. It's a long way from here, but with the momentum it has it could easily see something in the high teens.

U.S. Energy Corp. (USEG) tried to break out Tuesday, getting up to 6.89, but closed up at 8 cents below that. However, it's giving indications that it wants to test the 7.00 range, then take out the 7-7.35 area. The goal on this one short-term is 8.00. If it continues the way it has been, it could see 10 to 12.

Briefly on some other stocks we review in our video chart analysis today: Cardtronics (CATM) continues to edge higher. A year ago this stock was $.65, and now it's up to $11.49 and could continue to go higher. It's working steadily along the moving averages making progress as it goes.

Canandian Solor, Inc. (CSIQ) had a significant move after their earnings release Tuesday, running up to over 21, which is the highest level it's reached since August or September of last year. This one could get up as high as $25-$26.00 range short term.

Ion Geophysical Corp. (IO) broke out and surged 37 cents or 7%, a new high for the last 52 weeks, and if it continues it could get up to the 7-8 range.

Liveperson Inc. (LPSN) is edging higher and following through on Monday's breakout. The top of the channel measures 8, which is my goal on that one.

Nabi Biopharmaceuticals (NABI) has had a strong 2-day surge, up 65 cents or 14% on 3.1 million shares. At 4.54 it could get as high as the 6 range.

Nanometrics, Inc. (NANO) continues to impress. A 5-day move now has taken it from 7.20 up to 13.30, about an 80-85% run in just the last 6 sessions. Huge volume. Strong momentum. Could see top of the channel near 16 - 16 1/2 short term.

Revlon (REV), my favorite stock this month for sure, has gone from 6 to more than 17.70 just in the last 2 1/2 weeks. Heavy volume and great technicals, and may get up to the 21-22 zone if it keeps the momentum going.

Rino International Corp. (RINO) after breaking out a couple of days ago continues to edge higher. Top of the channel measures up around the 35 area and it's very conceivable we see that short term.

Jack Steiman, On Nothing Bearish So Long as 50 DMA Holds (SwingTradeOnline.com)

With very famous "experts", such as Meredith Whitney and Dr. Doom, telling us lately that we'd get killed if we bought stocks, it's impressive that the market held up so well yesterday. It was just Monday that Ms. Whitney told us this market had no right going higher. She pulls a lot of weight in this game, and for the market to ignore her says a lot. The bears could not ask for a better representative for their case, yet it didn't bring about any good results for their side of the story. Good overall action for the day from a bullish perspective. The heavyweight couldn't knock out the lightweight.

The dollar finally got a bounce today off of massive 75 support. The question becomes whether it's a bounce in a continuing down trend or a true reversal that says the dollar has reached its ultimate bottom and therefore the stock market its ultimate top! This cannot be answered based on a one-day bounce, but it's one that, of course, needs to be watched. The reversal wasn't rousing and in my opinion doesn't mean a thing. We have to see strong gap ups in the days ahead on strong volume with the PowerShares DB US Dollar Index Bullish (UUP) getting back over 23.00 to tell me there's something different going on now. For now, the trend remains lower for the dollar and, like it or not, that means higher for equities. Doesn't mean blast off. Means overall higher. Lots of ups and downs as we know.

As with any market that is trending mostly lateral, each day brings about a different place within the market where the action is more bullish and where the action is more bearish. The game of par. You need both types of action to keep the market in a consolidation, and Tuesday was no different. Commodity stocks overall were lower as were financials, but there were many areas where the action was quite positive. In the areas where there was weakness there was no technical damage done. That's the key. Selling is fine as long as it doesn't cause technical patterns to break. We're not seeing that day-to-day -- thus wherever the selling occurs, it has been a buying opportunity. If critical sectors start to crack, that'll be a huge red flag we need to pay attention to. For now, all is fine. If it changes, I'll make the necessary adjustments.

Bottom line is, as long as the major sector charts and index charts are holding over their 50-day exponential moving averages, there is nothing bearish going on. It's noise within a lateral consolidation that is there to play with your minds. Daily MACD's are still crossed bullish from lower levels, and thus there seems to be nothing to suggest a crash or massive sell-off is out there, but you always keep your guard up.

Mike Paulenoff, On Upside for Oil (MPTrader.com)

All last week we discussed the pattern in nearby crude oil prices off of the October 21 high at $82 looking like a high-level consolidation period prior to another upleg that should propel prices to new recovery highs that project to $84-86. At the time I viewed the decline below 76.50/30 as a violation of the developing pattern, which would be enough to get me out of my long position. Exactly that scenario unfolded last Thursday.

Let's notice on the chart that on Friday morning, nearby oil made lower corrective lows at $75.57, prior to pivoting to the upside into a new upleg -- the one we discussed all last week. Nearby oil is on its way to test the top of its consolidation range, near $80, which should be hurdled on the way to a full-fledged retest of the October 21 highs.

Let's recall that the weakness that developed last Wednesday and Thursday was a negative reaction to the oil inventory data. Forward fast a few days, and the entire downward reaction from last week has been recovered - just in time for this latest round of inventory data this morning.

If Mr. Market reacts negatively again to the supply data, then I will be watching support between $77.00 and $75.50 for a potential re-entry on the long side. However, Murphy's Law suggests that this week the data will come in more bullish, sending oil to the upside towards $82.00.

Published on  Thu, Nov 19 2009, 06:05 GMT