6 Trading Ideas For You Today
The SPX has support at 1200 and
again at 1190. The
intermediate term trend has turned bearish. The short term has been bearish. The
long-term view is slightly bullish. Could the old cyclical bull shrug off
another hit, or is this curtains for the mature old bull. Time will tell. The
heart of seasonal weakness approaches. It pays to be long and short. If you are
not short or hedged and have exposure then it is best to at least reduce the
exposure and utilize cash to hedge the play. The macro environment is bearish.
It has been since 1998. Markets react to news always. It is the reaction that is
paid attention to not the news. The news is an after thought. Market reaction to
the price of oil at record levels is threatening the life of the current late in
the day bull market. It could cave. Prepare for that. Prepare being selective
and cautious. The SPX, DJIA, COMP all broke key trend lines. Support has broke
and there are no positive divergences to fall back on. If the 200-day moving
average is violated then the current top formation formed will turn into a
decline. That is the threat facing bulls right now. So stocks like SBUX, GE, JNJ,
JBHT, CA are examples of stocks that reflect bearish bias in their pace of
trade. Don’t ignore longs as long as you have weak stocks at your disposal to
sell short. Examples of good stocks to own right now are CDN, CMVT, MDT, EWJ,
HLTH, and HPQ. I will get into a few right now and share the evidence and weigh
the odds long and short.
General Electric
(
GE |
Quote |
Chart |
News |
PowerRating) 33.54
George Edward. Stripped naked. Exposed. Ready to take another hit from a hungry
bear. That is how the action in GE looks right now. It is a piece of junk. It
trades like junk. Just a lot of junk. The stock broke to a new recent low
yesterday. It broke below 33.70 and that signaled another sell. I sold more
shares short adding to the position carried. Its good to carry weak stocks short
during the season of weakness. It makes sense to do that. It will make dollars
as well. GE is a timely short right now.
Computer Associates
(
CA |
Quote |
Chart |
News |
PowerRating) 26.24
Computer Associates broke down yesterday to lower lows. The stock is in
decline. It pays to sell declining stocks short. I am short CA. I sold it short
yet again and am betting that direction because the current odds favor further
erosion. The odds are always based on the evidence of the tape. Price action
over a period of 10 50 and 200 days plays a huge roll determining the future
price direction of a stock. CA at this juncture is embedded in stage 4 of its
trading cycle. . It is early in its decline. Look at the chart and check the
brake. Now is a good time to short this stock. The selling signal came when the
stock failed to close above 26.50. Look at the chart and see the action. It is
clearly negative.
Starbucks
(
SBUX |
Quote |
Chart |
News |
PowerRating) 49.42
SBUX trades as though it is
ready to test support at 45. A failure to hold 45 and the stock drops to 42. The
stock must be watched carefully. Never neglect an open position when at risk,
especially if it is a short position. SBUX is a good short right now. The price
of oil will affect SBUX. The chart tells that tale. As long as oil prices remain
high and interest rates continue to rise, expensive coffee will fall out of
favor. It won’t go away. It just won’t be as profitable. Their sandwiches
absolutely suck. The food at Denny’s is superior and that isn’t saying much.
SBUX stock is in a vulnerable position technically and is on the verge of a
deeper decline.
Comverse Technology
(
CMVT |
Quote |
Chart |
News |
PowerRating) 25.79
CMVT failed to go topside 26.70
yesterday. It almost made it and was angling toward it then it caved in the
afternoon. CMVT came in with the tide. Still in a positive market CMVT out
performs and the signals the stock displays are clearly bullish. It trades above
all key inflection points. You never really can be sure when the market will
turn either up or down. This current market is tough to navigate. That is why
individual stocks make sense. Buying and holding indexes have not served
investors well over the last 6 years. CMVT happens to be a leading stock right
now. It’s only up 5% this year so it is not extended. It is ready to go and a
weekly chart will compel anyone interested in making money to try it on. The
risk is low. The moving averages trade tight. That means the downside is limited
if you use them to guide the stops. I would use 23.69 considering this being the
season of weakness. You don’t want to miss this if it really takes a serious
run. The stock could easily double from here. That is its potential. A weekly
bar chart suggests that potential eventuality. My bet is that CMVT is up to the
challenge and that is the reason to own it.
Hewlett Packard
(
HPQ |
Quote |
Chart |
News |
PowerRating) 26.72
This is a good stock to be
involved in right now. The tide has turned in HPQ. The price action tells that
tale. The tide has turned and the stock is in bullish hands. The bulls have this
one wrapped up. The bulls taking profits orchestrate any pullback. A pullback to
the 25 zone lowers the risk substantially. A rise above the recent high in
decent volume invites you to get into more shares as momentum takes it to
greater peaks. Either way it is a good stock to stick a small toe in so you will
watch it. If you own it then you are forced to watch it cause you will never
break the cardinal rule of always paying attention in a place of risk. Like
driving on a busy highway or a crowded parking lot. Pay attention and avoid
trouble. Cut losses and take profits. The season of weakness is a good time to
load up on tech stocks that express a bullish trend. HPQ is one such stock.
Medtronic
(
MDT |
Quote |
Chart |
News |
PowerRating) 56.70
The best time to buy a stock is at the outset of an advance. That is a true
statement. It can’t be denied. It is a proven fact. All stocks eventually
advance. Some advances are better then others. MDT has just begun an advance and
it is destined to run to greater levels. The odds have shifted in the favor of
the bulls relative to MDT. The stock has not risen to current levels in close to
five years. The base built is substantial and MDT has risen above the top the of
base built over that length of time taking it out. A new start. Most of the
advance that occurred this year is recent. MDT is up over 14% this year. It’s up
almost 4% in the last 5 days. The group is clearly mixed. It’s a group that
ought to be exploited both long and short. MDT has exploded and it is best to
buy it coming in to the 55-56 zones. It ought to hold. It could rise to
challenge its 5-year high of 62 in the coming months.
Jack S. Rothstein
Jack Rothstein is the
President of Rothstein Investment Advisory Services, Inc. and is a 20-year
veteran stock trader and a money manager.
Mr. Rothstein also writes Wealthcast, a monthly newsletter about the technical
behavior of the markets. He has been quoted on Bloomberg, CNNFn, the Dick Davis
Digest and the Dow Jones Newswire. Since 1993, Mr. Rothstein also hosted
WealthCast, a radio show in the Washington DC area covering the stock market.