Monday, February 15, 2010

Reviewing the Generals

With the major indexes just below key resistance areas, it is a useful time to circle back and look at "the generals" of the market; i.e. the leadership stocks aka the "go to" stocks when institutional money wants in.  While it is a 'stock market', in the end its a 'market of stocks' - even if HAL9000 has made the individual stocks matter far less than the old days.

There can be no important stock to begin with on the entire planet galaxy universe than Apple (AAPL).  Not only is this the first stock every institutional and retail trader grabs for when he wants "beta", it is also is a large component of many of the major NASDAQ index ETF type offerings.  If you want to move the NASDAQ up - you need to move Apple.

So what we see above was an intraday break over key resistance but the closing price is always more important than the intraday price.  And on that count we are right at the precipice; it can go either way.  The 20 day broke below the 50 day (which is bearish) but that can be reversed quickly with a move up from here.

Next we have Freeport McMoran Gold & Copper (FCX) which became to hedge funds in 2009 what oil was in 2007 and early 2008.   After breaking its 200 day moving average, it might have formed a "double bottom" (a low that was tested twice) around $66.  Still too early to tell as thus far its simply done a cursory bounce and as a commodity is traded directly in inverse to the dollar.  You can see this last week - on Monday, Wednesday, and Friday when Europe was not saying something specifically about Greece, Freeport sold off.  Tuesday and Thursday when the rumor of Greek bailout (Tue) and "vote of confidance" (Thu) came out, Freeport rallied.  Does this have anything to do with Freeport McMoran's individual prospects as a business?  No.  But this is a our new and improved paradigm market where HAL9000's microchips processes are all that matters.  A move over mid $76s (50 day moving average) would be bullish.

Google (GOOG) - surprisingly lacking life.  It is not really selling off any further, but neither did it bounce like many of its cohorts.  The stock looks to be building an intermediate term base, as it is quite range bound... the longer the base, the bigger the move that shall ensue. The question as always is - up or down? (AMZN) - similar to Google but with a tad more spunk.  Not showing us any bullish move yet...

Goldman Sachs (GS) - continues in a world of hurt, one of the few leaders I can find that is actually below its 200 day moving average.  Basically since the Volcker rules went from 1% chance of happening to >3% chance, the stock has been unable to mount a move.

Visa (V) and Mastercard (MA) - the latter had an earnings report that was deemed unsatisfactory which caused quite a large amount of damage in the chart.  The former continues to chug along.  At this point Mastercard only has done a cursory bounce off its 200 day moving average and is now a mess... Visa was weak ahead of earnings but gained favor again as its debit business shines.  But seeing some higher highs over recent levels would be preferable.

Priceline (PCLN) - this is a more recent leadership stock (the last 12-15 months), but it also jumped over a resistance area that it had broken (50 day moving average).  Almost identical to the Visa chart; this regaining of support is at this point tenuous.

I can't consider Research in Motion (RIMM) a leadership stock at this point since its been out of favor for quite a while, but it has been acting quite well even during the selloff; so a name to note.  Please see it has been below the 200 day moving average (aside for a few days) for months on end.  The stock hit mid December highs Friday - a move over that level would be quite bullish.  This is far and away the most promising chart of the group if this move can hold.

Overall - as noteed in the weekly summary, the charts this Friday look a lot better than they did last Friday.  But for the most part it looks like a bunch of stocks that are either listless or have rallied back right to a key support / resistance area.  If you are a reactive trader there is little to do here as the signals to "buy buy buy" are still not here. 

No positions

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