The Early Bird Report 12-20-11
I feel like I keep typing the same thing day after day this month. Kind of sick of it, actually, so here is the short version. We’re gapping higher, making it difficult to chase longs, especially since every day this month (save for two), we’ve wound up selling those gaps and putting in red candles. Making it worse, the volume has been light and its a holiday week where there seems to be very little interest out there. Good luck.
Gapping Up– S CLWR CSIQ NAV CVS SLXP PGNX
Gapping Down — SAFM RHT IIVI TRGT GIS
No indication —CAG
Under $10 long momentum looks with strong closes/actionable charts: LDK GTIV AVID CLFD BSDM ACAD TWER
Over $10 long looks w/ strong closes/actionable charts: ETP REGN V CELG KMP VHC OCN ELN CPO ADES
Weak closes/short looks: AGO GCI NTRS SYY AIG CNW PLL WAG
Stocks pulling back near key Moving Averages:
20d: SIG R KMX N
50d: LXK ALL PLT BIIB AMT IP MWV TECD NWL MRO
200d: SYY DCI BLK NUAN CB AIZ NTES
3 ideas for today’s trading day:
These are ideas…. NOT recommendations. Often times I trade these setups, many times I don’t…dictated by market tone for that day. Complement these ideas with your ownresearch before making any trading decisions. Always consult your own registered broker/advisor before initiating any positions.
1.) Traditional long: V// CF
If you would rather trade strong names with strong charts, then I would stick with V again today. It traded very well yesterday in a weak tape and seems destined to try to crack the $100 mark. Unfortunately, there is a strong chance that this morning’s gap will force you to chase it up near that level and encounter some real choppy trade there.
If you are sick of chasing and playing breakouts, and would like to find a name that is coming off of lows, I would look at CF. The stock has been very weak this month (with the market), but the last few sessions, the name has tightened its range, and seems to want to hold this level. Yesterday the stock stayed above its morning range lows (128.50), even as we sold off hard in the afternoon. A break below 128.50, would suggest that this has just been a pause on the way back toward early Oct. lows, but if it we can (somehow/someway) actually build on a gap higher in the market, and get ourselves a trend higher day, I think CF has some nice upside back toward the 139.79 area.
2.) Traditional short: NTES
Make no mistake, of the Chinese internet stocks, NTES has been the strongest performer lately, holding up relatively well, while the others have been very weak. Yesterday, however, NTES looked like it may have started to crack, putting in its worst performing candle since late November, when it staged a 6 day drop from 48.97 to 40.69. It is still trading below a 6 month Declining Trend Line and is now threatening to move below a cluster of Moving Averages (10/20/50/100/200) are all within a point and a half of each other. IF the market sells this gap (again) AND there is continued weakness in Chinese Internet names, I think NTES could be a good short today, as it may try and play catch up with its peers.
3.) Small cap momentum: GTIV
A notably outperformer yesterday, this stock finally was able to move out past a multi-month sideways channel. Trading above its 20/50/100d MA’s now (200d is still waaay up there at 15.15), there is not a whole lot of resistance on the daily chart. Will monitor the stock to see if it can build on yesterday’s nice move. There are a few red flags, however. First, the volume was good, not great. For a breakout like that, I would’ve liked to have seen a bit more (glass half full says maybe it’ll come today). Second, these types of breakout patterns have been very hit/miss for the past 9 months or so. For every stock that actually builds momentum in the direction of the breakout, there seems to be one that reverses, and another that trades sideways. Means that entries have to be picked very selectively, and chasing highs and long candles can be a bad idea. Will look for a mild pullback or sideways consolidation on the open to get long. I suppose buying above yesterday’s highs is an option, but volume would need to be pouring in, in order to justify chasing. Below 6.25, I would be hesistant to be very long, as a reversal move becomes in play.
The Early Bird Report