I’m expecting a bounce today, here’s why
That is what happens
when you pick at bottoms. It feels like getting beaten up in a Shvitz
by an Uzbek. That is what it feels like right now. What about the result? The
ultimate result that ought to be focused on? Support levels are approaching.
Could this be a bottom taking shape or will nerves get rattled causing greater
selling pressure? Will weaker hands lessen the load? Will this market hold the
following price zones? Dow 10345,SPX (cash)1200,COMP 2080, and NDX 1535. We are
not at the bottom. Not yet. That level is bound to get a test and if it holds,
and all 4 must fall below those critical support zones to declare this bull
market over. A new bear market starts at that time and the exposure to risk
greatly reduced. The short side will get greater play. Many stocks are already
rolling over.
Yesterday I made a move that reflects a bold
stand. I covered several shorts. Took profits. Covered and gained. Yesterday
losses were just paper percentage points. That is all. Gains were realized. I
covered YHOO. Had a big position and bet that it would fail miserably in a weak
market. Declining issues have a tendency to weaken badly when the overall market
sells off. The short play can be gamed in here. I covered YHOO and SHLD. Covered
both taking gains. I used the QQQQ and sold short yesterday to hedge my longs.
It was a weak hedge and covered late in the day taking a small profit. The hedge
was nothing more then a day trade. Finding a good hedge is necessary when the
stocks you are long get whacked. They got whacked like a fellow getting beaten
with dry oak tree leaves by a mad Uzbek at a Svitz in the East Village, USA. The
hedge didn’t work. Today is another day and the market is oversold. I want to
get into a few stocks that I believe will hold its advance in spite of the
current weakness. The following longs and this morning it will be longs only,
the following longs are all in great technical shape and are poised to expand
their respected market caps. Lets examine them and let the charts tell the tale.
Baxter International
(
BAX |
Quote |
Chart |
News |
PowerRating) 40.19
BAX traded down to its 50-day line yesterday. It
bounced off it. Bounced off its 50-day line to close just slightly above it. The
advance is still in tack. It turned short term negative. That means the price
has dropped below its average price over the last 10 days, which is 40.33. The
advance is solid. It is steady. Worth owning for the long stretch. It is a good
buy down to its 50-day line. BAX is up 16% this year and 27% over the last 52
weeks. The stock currently trades above intermediate and long-term price points.
It has that going for it. It is a favorable stock. A decent long-term
investment. A lousy short term trading vehicle. A good solid long-term play.
Place the stop below its 200-day moving average and have the commitment to
pyramid the position.
Cardinal Health
(
CAH |
Quote |
Chart |
News |
PowerRating) 61.62
CAH is coming into buying range. The current
daily chart compels technicians to grab shares. The stock has to pop up on all
kinds of screens as a favorable long right now. It experienced a brutal decline
last summer. It bottomed at 36.08 in October 2004. It has been basing after
filling its down gap and the advance has just got an extension as it had a
modest breakout the other day moving from 60 to 62 in modest but better then
average trade. The stock is on the road toward the 66 to 67 zones. A buy in the
60 —61 zone provides a potential gain of 10% and a tight stop under the 200-day
line at 57.25 favors the reward side of the equation. The risk is controlled by
stops. Modest losses keep you in the game. Eventually you get dealt a winning
hand and the winning hand may provide solid gains. The chart says CAH is a
winner over the intermediate and long term. Short term is far less important. If
the overall market holds support and makes a short-term bottom over the next
week then CAH will rally well when the bull moves in to take advantage of
oversold conditions.
Intersil Corporation
(
ISIL |
Quote |
Chart |
News |
PowerRating) 20.82
The chart reflects a decent advance that comes
after building a nice base that followed a brutal decline. The chart reflects an
advance that is solid. It is short term negative and short-term negative charts
provide intermediate and long-term players a chance at lower price points. So
the stock came in after making a new 52-week high (21.75) on 9/9. It has held
rather well inspite of the markets current behavior and is expressing favorable
odds to rise powerfully when this market rallies. It’s down 2.57% in the last 5
days. That is what coming in means. That is the truth. So what do you do about a
stock that is in advance after it comes in? Perhaps buying it comes to mind.
That is what to do about ISIL right now. It presents a low risk play. That is
the unfolding about ISIL. Place the trading stop at 19.99.
Parametric Tech
(
PMTC |
Quote |
Chart |
News |
PowerRating) 6.48
Nice stock. It came off the 150-day line the
other day. It held and bounced and is still in the process of bouncing to
challenge it’s near term peak. The stock is actually up over the last 5 days and
I have a large position in it right now. Lets see what the chart says and why
it’s a decent play. It trades just pennies below its 10 day line so it is just
slightly negative short term. The intermediate term is slightly negative as well
and when the stock gets healthy on a closing rise above 6.55,then that is the
precise price point to pick up shares. A close above that level and it stands a
better chance due to better odds to attract the necessary flow of funds to test
7.20.
Altria
(
MO |
Quote |
Chart |
News |
PowerRating) 71.63
Rock solid with a 4.46% current yearly pay out.
Nice. The stock is in a rewarding advance right now. Buying it coming into the
69-70 zones is appropriate. Who says so? The chart says so. The pattern of trade
favors greater heights for MO as we move along in time. It’s a decent stock
right now. It turned short term negative. Should it cross 72.35 near term then
that too is a signal to buy. The shares are in a solid advance and are a play
for long-term investors. Place the stop at 65.50.
Yamana Gold
(
AUY |
Quote |
Chart |
News |
PowerRating) 4.34
The gold sector is raging. I own 3 gold stocks
right now. This is one of them. The others are BVN and GG. All flying. Raging in
a storm. Identify leading sectors and take positions in winning stocks within
that sphere and mine them. Mine them for all they have. Get it to the last
nugget. So I actually intend to add to the three names pulling back in lighter
trade. A price of 4 is a good price to pay for AUY. Let it come in. That is my
intention. Rather not chase it in here. The buy point is form 4.25 down to 4.
Place the stop at 3.89 for traders and 3.35 for investors. Gold rages. The
result of getting whacked by a mad Uzbek using oak leaves in 200-degree heat is
pure gold. The New York Yankees are where right now? The NYY have just begun
their advance to the World Series. No question. No doubt. They are the best team
in Baseball. I predict the Yankees will beat the Braves in the World Series in a
classic 7 games and my cousin from BKLYN will be wearing his Yankee cap again
all year.
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.