This Is How The Market Is Setting Up
The S&P 500
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SPX |
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are coming in after a big move in July. That is natural. It happens every August
with a few exceptions. September typically fades to bottom sometime in October.
That is how the market is setting up. Perhaps we get a rally after another week
of consolidation and soft selling. Energy stocks took a hit this week. Bullish
views about the energy sector are extremely optimistic and that is a crowd I
would rather not hang with at this time. I am long some energy related stocks
and will get into those in a moment. The highlight of the day or bright point
was the action in
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MDT |
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BEAS |
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stock did make a firm move in the afternoon to close the session off its lows.
The market is choppy and the selling mild. Volume light. Now away from the
market and into a few stocks that caught my attention today
BEA Systems
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BEAS |
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PowerRating) 8.87
Sellers took profits after earnings were announced. The street hates the stock
but all they have to do is hold the line at 8.25 and it maintains its technical
healthy underpinning. BEAS failed to close above its 50-day line. It can go
either way. It could be a big winner long term if the 200-day line holds. It
could be the beginning of an intermediate slump at which point trimming would be
a wise course of action to take. Trim into strength and use the 9.80 zone as the
signal to get involved more seriously.
Medtronic Corp.
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MDT |
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55.84
Ah Yes. Finally this brick turns the corner. MDT broke the top of its base today
taking out 55.45. It backed off the highs to close above where it needed to so
that a serious advance will occur. The stock is ready to rocket to higher price
points. A rally near term and the stock really takes off. It should be bought. I
bought more this morning as it crossed 55.50. I added to the existing position I
carry. I like the group. Medical equipment stocks are on a tear. This choppy
trading instrument now has room to breadth. Lets see if the buying power
displayed today picks up some momentum carrying the stock to higher price zones.
Place the stop at 51.85
Wyeth
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WYE |
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A dud of a group. Big Pharma is unattractive right now because the sector is
weak technically. A basket of losers is what they are. Alas, among all those
rotten apples is a sweet one just right and ready to pick. That is how WYE
trades right now. The pitfall is that it is in a lousy group. So here is a good
stock in a lousy group that must at least cross 46.52 on a closing basis to get
excited enough to take more shares adding to the position. So WYE is trading
well right now and could break out tomorrow. I am involved and will add to the
position I carry on a close above 46.55. Place the stop at
42.50.
Redback Networks Inc
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RBAK |
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8.85
The stock came in and is still extended. I own it. I will buy more shares if the
stock comes into the 8.25 range. The risk is more manageable and palatable at
that level. View the chart and check out the moving averages and notice an
extended condition. Extended stocks although technically healthy carry greater
risk because of the price action. Patient investors favorably disposed to
exploit the good chance that RBAK reflects right now ought to let the stock come
in. The place to protect with a stop is 7.50.
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