Your 13 Trade Ideas For The Week Of 11-26-12

The markets got a nice bounce last week, however due to the short holiday week and volume being less than desirable, that bounce is guilty until proven innocent.

The name of the game since this market decline started has been “relative strength,” and there are a number of charts that are showing that in spades, but first let’s take a look at some sector action.


Two weeks ago I wrote, “After being in a down channel for six months, $SKF put in a double bottom and broke out of that channel.  If it breaks resistance at around $39.50, that would not be a good thing.”

Fortunately it failed that breakout (see arrow on above chart).


The analog twin to $SKF, the $XLF made a nice bounce off it’s 200ma which hopefully means the financials have more gas in their tank.


The biotechs were hot, hot, hot this year but got taken down when the market decline started.  The $IBB however did a  “double tap” at the 200ma and bounced nicely. Need to see some consolidation first, but that could set up another run in this sector.


Another hot sector this year as been the homebuilders.  $XHB found support last week and looks like it is poised to go higher.


About two months ago in this post I noted that the $FXI seemed to have found a bottom.  After a nice break out it pulled back to support and the 200ma and bounced well, which is good price action.

So let’s take a look at some individual stocks.


After a small head fake, $BAC has resumed its upward movement and looks like a buy above $10.00 if it can breakout with volume.


I don’t know anything about $CEL but its been basing right below gap resistance and has broken its 200ma for the first time in about two years.


Looking like it may have put in a bottom, $CMI will have resistance right at the trendline and the 200ma.  Breaking out past both those could ignite a nice more up.


The monthly chart of $CRM looks even better as it is getting near all-time highs.  A break above the trendline with volume is the buy point.


Recapturing the 200ma is a good sign for $EA.  A couple of days of sideways action below resistance would set up a nice long trade.


Will it or won’t.  Who knows, but if you want to play it long, there is a clear line in the sand here for $FB.


In the homebuilders, $LEN looks the best as it consolidates right below a five-year high.


Tough to trade at times, but $MA is a powerhouse basing just below all-time highs.


Materials & construction go hand in hand with homebuilders, so it’s not surprising that $MAS is breaking out here.


This slow, wedging action out of the flag is technically bearish, but if $NFLX can break $85.00 with any conviction a lot of short sellers are going to have to cover which could squeeze this thing higher very quickly.


A little head fake out of the flag, but price came right back in which makes the chart in $NTE still look good.


I like the action in this channel for $TEX.  A measured move out of it could take the stock to the $29.00-$30.00 area.


After coming off a bottom in July, the price range in $TIVO continues to get narrower, indicating a big move is coming.

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  • Aaron

    Wonderful group of charts! Many thanks.

  • Jeff Watson

    I’ve never used Technical Analysis in my life as it is not scientific at all. I prefer a quantifiable, scientific approach to the markets. Sometimes I’m right, sometimes not so. Still, I’ve had a limited degree of success over the past few decades. Does TA really work for you? Do you rely on it? There are many better methods than TA of discerning market direction, but I will leave that up to you to find.

    • I think a point of delineation here is that you are not representative of the vast majority of traders in that you started in the pits and don’t have a “retail” mindset when you trade. You are a “professional” trader in every sense of the word in the way you approach the markets.

      Also, as far as I can tell, your emphasis is in futures which may not be an asset class as a whole where TA can be useful.

      TA’s main benefit to the retail trader is that it give them objective criteria for setting up good risk/reward trades and for managing risk in general.

      Also, I think the term “Technical Analysis” probably needs some context. I use it in the sense that no fundamental or value analysis is part of the equation, except perhaps to narrow a pool of potential trade candidates.

      That said, I like to focus on volume, price, and S/R almost exclusively. TA is just the graphic footprint of human emotions and reactions in the markets.

      Those emotions and reactions are universal and repeatable, like knowing that a paroled crack addict will probably use and go back to jail again.
      Those repeatable patterns combined with objective stops and targets are what TA does best.

      Most of the other indicators are superfluous in my opinion as they are derivatives of price and volume anyway.

      • jeff watson

        Well, at least you get it. I do some multivariate Bayesian analysis which are derived from some of the aspects of volume, price, S/R, and a couple other ingredients. Still, even with some sophisticated tools in my belt, I remain pretty confused 90% of the time but can roll when markets are amenable.

      • I had to Google “Bayesian analysis.” Thought it was some East Coast surfer jargon….LOL