Here’s what’s driving the market besides Katrina…
The season has turned.
Post
Labor Day trading will be positive this morning as the futures trade up. Markets
in Europe are positive, while Asia is slightly negative. Global markets are
mixed right now. If the SPX stays above 1215 and the COMP above 2130 then the
bulls benefit from better technical conditions resulting in enhanced confidence
to put money to work in equities. I will get into a few instruments that I am
either involved in or considering. The current market is resilient. The reaction
to Katrina was a clear tell that the current market is not ready to fall apart.
The corrective action that occurred in August appears over. Moves to challenge
recent highs could occur. Much depends on the head of steam that will evolve.
Some of the stocks I will get into right now are stocks that are on the verge of
providing good performance. In some cases the performance persists. Over the
weekend I wrote the monthly market letter, which will be posted, on
www.wealthcast.com later in the day. In that piece 10 longs and 10 shorts
were focused on and written about. A couple of those stocks may be mentioned
right now because I am eyeing them and am ready to add to them should the price
points I am targeting be hit. I will get into longs only right now because the
futures are up nicely and am in a buying mood.
Procter
& Gamble
(
PG |
Quote |
Chart |
News |
PowerRating) 55.99
PG is in fine shape technically as a long
consolidation pattern followed a nice advance that happened in 2003. The stock
has been flat for the last year and is currently flat this year. Watch this
stock closely and get involved in it as it crosses 56.80 and buy it harder still
going over 57.40 on a close. The 57.40 level takes out the top and that fact,
should it happen, will free the stock up to seek a new top at higher price
points. The stock could reach the initial point where action ought to begin
today. It could happen today given the firm open that is likely. All that is
important about PG is the action expressed by the stock. Those holding the stock
for the last year are not really happy about the performance at all. Why should
they be? Today the stock is acting as though it is getting set to begin a new
advance after pausing for a year. I will get in on it because it provides a low
risk chance. I will begin buying PG above 56.80 and then again more aggressively
above 57.40. The game plan in this instrument is to exploit the head of steam it
picks up after making a new 52-week high. Stops should be placed at 53.99.
Novell
(
NOVL |
Quote |
Chart |
News |
PowerRating)
6.80
The chart is lovely sight right now. The risk
is minimal. That is what the chart says. NOVL is a low risk try right now and is
currently trading above key inflection points after building a long base along
the bottom over the last year and change. The base follows a brutal decline that
followed a decent advance. Stocks cycle. If you are able to identify a stock
that is at the outset of an advance after building a decent base then the odds
favor that you will succeed in the trade. The key to success is the ability to
spot turns in the action of an instrument. The price movement of NOVL has
shifted. Check out the chart and notice the shift in the tone and pace of trade.
It now trades above key inflection points. I will stick my big toe in and get
involved in NOVL with the commitment to add to the position coming in to the
6.50 zone. A tight stop is placed at 5.79.
Integrated Silicon Solution Inc.
(
ISSI |
Quote |
Chart |
News |
PowerRating) 8.88
Don’t cheat on this one. I won’t. No toe in
the water. It’s to close to the top of its base to anticipate. Patiently wait
till the stock crosses that level on a close. I will buy the stock crossing 9.15
on a closing basis. That happening ought to inspire confidence and demand. It
really isn’t a long-term investment. It is a trade up to the 11 zone. The action
in the stock is solid right now. The rising 50-day line brushes up against the
current price and that rising line ought to force the stock higher and
ultimately above 9.15. It could happen today. A daily chart will provide clear evidence of its
upside potential. It trades above all key inflection points. It is ready to go.
The 50-day line is 8.49. Place the stop at 7.99.
Teradyne
(
TER |
Quote |
Chart |
News |
PowerRating) 16.81
I am involved in this stock. I will add to
the position I carry should the stock cross 17.I prefer the stock to close above
17 before pyramiding the action. It continues to climb off the bottom. It is a
stock that has been brutalized and left by the side of the road for the vultures
to have at it. Today it trades above key inflection points in a new advance that
could be serious. A close above 17 confirms the favorable odds that TER rises to
higher price points. The stock will run into major resistance in the 21-22 zone.
That is a long way from 17. A potential return of 30% and a risk down to 14.59
makes this a good bet. Place the stop at 14.59.
Leap
Frog
(
LF |
Quote |
Chart |
News |
PowerRating) 13.93
I just got into this stock the other day and will try it a second time. The
action is good and the stops placed are tight. It is coming off a long base
after a brutal decline. The stock traded at 36.50 in November 2003.Now the stock
is on the rise once again and the time to get involved is right now. So I will
pick up more shares coming into the 13-13.50 zone.Â
Cadence
Design
(
CDN |
Quote |
Chart |
News |
PowerRating) 15.94
A good solid stock that has to get a mention
because I am a believer that it will persist in its advance and cross 16.15 on a
closing basis at which time I will proceed to pyramid the shares and make
serious money. The demand to pick up shares of CDN will be greatly enhanced
should the stock price rise above 16.15 on a close. That will add fuel to the
current advance and enable the stock to climb higher. Place the trading stop at
14.29.
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.