Week in Review

DJIA +172.79 (+1.35%) to 13,009.68 S&P 500 +18.12 (+1.30%) to 1,409.15 NASDAQ +40.30 (+1.38%) to 2,966.85

This has been the standard holiday trading that we have been highlighting.  Lower volumes and a drift higher.  The recent lows have provided a nice trade and today was more than just an up day with the S&P gapping higher and continuing all, albeit a half, day.  It is very difficult to get bearish during a week like this and in the face of moves like this and rightfully so but today, as we were noting on Stock Twits (WSConsensus), is the kind of day you want to be lightening up on longs or initiating hedges.

Two stocks of the day were up after having been beaten for a while, Molycorp (MCP) and long trade idea Research in Motion (RIMM).  MCP gained over 18% and RIMM over 13%.  We had been out of RIMM on the recent touch of the 200 day MA and over 10% gain but today provided a big jump on an upgrade and what seemed to be a short squeeze.  We noted caution today as RIMM should like face some selling at these levels and slightly higher.  There is resistance and resistance means past levels where buyers have been “bagged” and might look to lighten exposure.  RIMM has regained the 200 Day SMA and 13/34 MA’s  and can continue to be a long candidate but only after a rest.  MCP was on our early watch list but not a name we had taken any action on.  Still quite beaten we will wait on MCP to see if a better opportunity represents itself but if your itching to get in we would use the recent lows of last week at $5.75 as our stop.

Week in Review:

Monday’s stock of the day was Lowe’s (LOW) producing earnings which made Wall Street applaud and LOW has indeed rallied with the market this week but as we noted Monday evening this name does feel very extended and while we were not shorting we also could not see allocating fresh capital to this name.  That sentiment remains.

Tuesday was a mixed day for the markets with the Dow down but the S&P and Nasdaq closing higher.  Not mixed was the performance of Hewlett-Packard (HPQ) and Best Buy (BBY).  HPQ dropped on an announcement from Meg Whitman  that a British company it bought, not during Mrs. Whitman’s tenure, for $9.7 billion last year lied about its finances, resulting in a massive write-down of the value of the business.  BBY was a simple old fashioned earnings disappointment.

Wednesday was….yawn…boring.  We did have some economic data: Unemployment claims coming in at 410K (below estimates), Manufacturing PMI which came in higher thank expected at 52.4 while Consumer Sentiment lagged coming in at 82.7 below estimates.

Thursday was Thanksgiving and we truly hope everyone’s day off from the markets was a time for rest, reflection and Joy!

Major averages 5 day results:

Dow Jones Industrial:

S&P 500:

Nasdaq:

Back to the Markets and predominantly the S&P 500.  Our stance was we should rally in this shortened holiday trading week and that our first look might be to take a shot short on the first test of the 20 Day MA.  The problem as we noted during the week is that plan changed as the rally manifested and we didn’t get the set-up we were looking for which was a touch with a hard sloping MA and instead we had this almost flat MA as the S&P was grinding higher.  During the rally we suggested looking to take profits and trailing stops on any names to not give-up gains and today on our Stock Twits feed (did we mention its WSConsensus??) we noted that the rally into the close was again a great spot to lighten up or use the S&P to short for a trade or hedge a portfolio.  We also noted the way we would doo it is through options so we knew our exact cost.

What now?  I think we continue to play the individual stock plays that we have high conviction on and monitor the overall markets because if we see another hard down move, most stocks will likely be taken down along side.  Our plan has been for a bottom and move to higher prices and while this is definitely not the bottom we envisions it is possible that the holiday trading session forced a different pattern into the forefront.  Again, we are more reactionary so we will continue to monitor and reflect as we keep getting more data.  In the meantime there are still stock patterns we like and will be posting some patterns we like over the weekend.  Below let’s look at the potential inverse H&S on the 60 minute S&P chart with a potential target up in the 1434 region as well as key levels on the Daily.  Also a McClellan update and a view at the amount of stocks trading above their 10, 20, 50 and 200 Day SMA’s on the S&P, Nasdaq and Russell 2000 (respectively left to right and then top to bottom).  That chart shows that we are facing extended levels when looking at the 10 day but not yet on the longer timeframes like we had in September.