Here are 6 stocks I’m focusing on today
The quarter is winding down.
The markets are essentially down for the year.
The SPX (cash) is flat. That is
the gist of it. It is a stock-picker’s market. The market is neutral. It’s the
way it has been for a while. It is the reason many feel this bull is “late in
the dayâ€. So the bull market is late in the day. What does that mean? It
actually means that market averages fall below key inflection points causing a
shift in the overall trend. It is the long-term that is most important. If the
long-term health fades and a decline begins then making money in stocks is more
difficult. The scope narrows. The odds are less favorable. The pickings are
slim. That is a bear market. In a bear market on average over its course at
least 30% of all stocks trading maintain an advance. I would rather that 70% of
all stocks trading rise over time. Right now the market is neutral at best. Most
individual stocks are trading below key inflection points. Some may view a
bottom being formed, while others see a major top near completion. Its best to
focus on the individual stocks and examine the nuances of the specific pace of
trade they express. Long and short. It means you can make money in any kind of
market. That is the theory. The thesis is consistent with the play. Each trade
ought to be judged based on time. A swing trade may fail on a daily basis. I
will provide examples of stocks that ought to provide decent gains on a swing.
Coming into the end of the quarter is always stimulating. Am I satisfied with
the performance delivered? I am more satisfied with the current play served up
by that great ball club from the Bronx. My own play pales by comparison. It is
about stock picking and execution. The ability to pick stocks, of course
critical, and more then that is the ability to execute a trade. It is all about
completing the trade favorably. About doing what is perceived the right thing to
do in the moment. That is what trading is all about. It is about nerves as well.
A disciplined approach enables the nerves to stay in check. A disciplined
approach removes the emotion. That is why day trading can be treacherous. What I
seek every day is the contact with charts that are highly favorable over 50
days, 150days, 200days,and if that chart is failing to hold its 10 day line then
it is not at all favorable. Not for a short-term trade. Day trades form
different patterns. A 5-minute chart is a day trader’s frame of reference. I
will offer a few timely examples of stocks that are good for a swing.
JDS Uniphase Corp.
(
JDSU |
Quote |
Chart |
News |
PowerRating) 2.01
An old favorite. A blast from
the past. The past is dead and gone; the present moment is what is important.
The present moment tells whether the future is favorable. And what about the
future? Is it 5 minutes or 5 years? That is the choice of the player. The choice
concerning JDSU is timely. It is a timely choice. That is all that can be said
about it. It has been crawling on the bottom of the basement floor for a long
time. It finally broke above its base busting through a declining 200 day moving
average. When a stock after hitting the skids builds a base and manages to climb
above that base into a declining 200-day line then the move is real and it is
powerful. It did that in heavy trade. It took heavy buying power to get the job
done. JDSU broke out the top of its baseline in heavy trade and is on its way in
a new advance. It has resistance at 3. It is good for a swing. At least it is
good for that. I am in it, having bought it yesterday at 2 bucks. I am not done
buying and will pyramid the shares taking full advantage of a sprint up to the 3
zones. Place the tight stop at 1.85.
Autodesk, Inc
(
ADSK |
Quote |
Chart |
News |
PowerRating) 42.72
I found a good stock and better
late then not. I picked it up yesterday taking a token position with a toe in
the water. I like the action in the stock right now. It displays good positive
action. It broke out on 8/19 in heavy trade. Has since come in a tad and now it
is showing a willingness to test the near high made the other day at 44.40. It’s
a good stock to get involved in for a swing. It ought to be bought coming in to
the 40-41 zones and above 44.40 hard. It is still in a major long-term advance
but the advance has been stymied and the best out of ADSK is to play it on a
swing. The 50-day line stands at 39.26,so the trading stop placed at 38.99.
EnCana Corp
(
ECA |
Quote |
Chart |
News |
PowerRating) 56.16
EnCana is a great performer. Had
it most of the year. It is up roughly 100% this year alone. It is a good time to
sell a piece of it. That is my view and that is what will happen today. I will
book the fabulous gain. That is what to do about extended stocks that are
vulnerable to a major draw down. The gain is made. I am not interested in being
a piggy about this one. So the profit will be taken today. The 200-day line is
in the distance. It’s a rising line. The stock really needs to come in a tad. I
wouldn’t rule out another visit after it comes in. It is time to apply what was
gained in ECA to another potential advance waiting in line.
Tellabs
(
TLAB |
Quote |
Chart |
News |
PowerRating) 9.96
The stock is ready to romp. It
is very favorable for a swing and possibly longer. Business is better. They are
still around. The most important point to make is the way it expresses itself
relative to its pace of trade and price pattern it currently forms. Take a peak
at a compelling chart. It is a stock that you can make a big bet on and easily
control the risk adhering to tight or wide stop losses depending on the scope of
trade. Get that! The scope of trade could be years or minutes. It only depends
on the choice made. I like it for a swing. TLAB signals a buy hard approach
rising and closing above 10.40. That is the level to come at it hard. In the
mean time come at it. It is a good stock to get involved in right now. It is
timely. It can challenge its long term high made last year at 11.37. TLAB is up
15% this year most of which came recently. The advance is getting underway. A
rise above 10.40 and it gets legs. Place the stop at 8.99 for a swing.
Advanced Medical Optics
(
EYE |
Quote |
Chart |
News |
PowerRating) 37.54
A pleasant stock to have a short
position in right now and the short position ought to develop into a healthy
gain. Day by day EYE weakens. The decline recently began, completing a major
top. The top could get another test, and it may not. Right now this stock trades
under all key inflection points. It is entrenched on the dark side and is in a
bear hug. It is getting squeezed as profits and late investors those that got in
the late stages of its advance bail. I see no strength in this stock at all.
None. Go in for the kill. That is the attitude necessary to make some coin on
this vulnerable instrument. The stock could test 35.90. A drop below 35 and it
is curtains and a serious decline takes shape. The odds favor that happening. It
is a compelling short. It is always best to short up. If it provides a bounce
then there is the chance to put fresh money to work or add to it. It is headed in the direction of 25 a share and that is the
place to take the money off the table in EYE. A
stop for a swing at 40.25.
American Eagle Outfitters
(
AEOS |
Quote |
Chart |
News |
PowerRating) 24.16
Is the market telling of a lean
holiday season to come? Perhaps. I shorted this stock the other day near 25 and
was lucky to have it cave that very same day dropping down to 20.32. I covered
immediately and laughed a little. Now I am back in it on the short side after it
bounced and will short more into strength. A bounce is all it is. I believe the
break down is real and the current stage is merely a test that will likely fail.
The odds favor a decline. The stock is coming off a stunning advance that lasted
over a year. So take a close look at it. It is very late in the day and has
actually rolled over. The top is not major. It is just off the peak so it is
natural that the break gets a test. I say the advance is over, making enough of
a top to get a decline going. It has a
low to get tested and that is 20.30. Place the stop above key points. A swing
has room up to 27.75
Trusting your swing plays a roll to succeed.
Trust who you are and stay with it. It’s the best you can do and the right thing
is the best thing. Look at Derek Jeter and Tiger Woods. If they were stocks
would you buy ’em? That is what I am talking about. So AAPL is like Tiger Woods.
It is what it is.
Jack S. Rothstein
Rothstein Investment Advisory Services, Inc.
3600 Chain
Bridge Road, Suite 200
Fairfax VA 22030
Phone
888-343-4825 — Fax 703-385-7232
www.jrmoney.com
— www.wealthcast.com
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.