TradingMarkets’ 7 Stocks You Need To Know About For Wednesday

Stocks fell Tuesday on lowered
guidance and inflation concerns. 

Lexmark
(
LXK |
Quote |
Chart |
News |
PowerRating)
lowered guidance for Q#
and now sees EPS of 0.40 -0.50 vs. the $1.02 consensus. LXK fell 17.44 to close
at 13.50.

Clorox
(
CLX |
Quote |
Chart |
News |
PowerRating)
guided lower for Q2 and now sees 0.41 -0.47 vs the 0.55 consensus.
(full
story
)

Sun Micro
(
SUNW |
Quote |
Chart |
News |
PowerRating)

said it entered into a multi-year strategic agreement with Google
(
GOOG |
Quote |
Chart |
News |
PowerRating)

promoting Java and the Google Toolbar.

Speeches by two Fed officials–St. Louis’ William Poole and Dallas’
Robert Fischer–focused investor’s attention on inflation.

US chain store sales rose 0.6%. Factory
orders
rose 2.5% vs the 2.0% consensus.

Now, here are a few stocks to watch on Wednesday:


National Semi
(
NSM |
Quote |
Chart |
News |
PowerRating)
meets with
analysts on Wednesday.


NutriSystem
(
NTRI |
Quote |
Chart |
News |
PowerRating)
guided well above
consensus and the stock traded up after hours.


Mips Technologies
(
MIPS |
Quote |
Chart |
News |
PowerRating)
guided Q3
lower and now sees revenues in the $11.8-$12.0 million range, down from the
$14.7 million consensus.


Mercury Interactive
(
MERQE |
Quote |
Chart |
News |
PowerRating)
guided
its third quarter below consensus, to $198-$203 million, from the previous
$205-$215 million.


EMC {EMC|EMC] has made a nice "V" but may
rest a bit here.


DRS Technologies
(
DRS |
Quote |
Chart |
News |
PowerRating)
also looks
lower, having pulled back up to its 50-day MA after making a lower high.


Lexmark
(
LXK |
Quote |
Chart |
News |
PowerRating)
got whacked on Tuesday
after guiding lower. There is always the possibility of a short-term bounce, but
this is for very nimble traders only.


OK, here’s the chart of Capstone I put up last
night and here’s what I said:

"Capstone (NasdaqNM:CPST
News) rose after a CNBC
guest said the company had record insider buying. Also, there is a very
interesting pattern going on here–actually, one of my favorites. Please email
be at
bricewightman@tradingmarkets.com
and let me know what it is. (Hint: it was a
TradingMarkets Trading Lesson of the Week a while back). I will let you know
what the answer is later in the week."

I got a ton of email on this and, by
popular demand, rather than waiting til later in the week to give you the
answer, I’m going to explain it now:


Notice that the price is higher, but the
stochastics are lower. This is exactly opposite of the way stochs are
used traditionally. Normally, for a long, you’d be looking for price making a
lower low and stochs making a higher low. That is called positive stochastic
divergence.

In the chart above, you’ve got the opposite situation: price is higher but
stochastics are lower. I have seen this called "hidden divergence" or "reverse
divergence." Call it what you like, but it seems to be effective in many cases
(no, not all, nothing works every time–remember that).  This is not my
pattern nor am I taking credit for it–just passing it along to you.

We’ll see how this one plays out.

Brice Wightman