This whole rally has been about turning bearish patterns bullish and squeezing the masochistic short sellers.  If it doesn’t happen this time you better think long and hard about what that means for the market, I know I will.  I still believe the long term trend line setups will work, like the one I posted this morning in $HITK, if they fail, watch out below.  I’m at 7% cash in the momentum book, and I’ll look to add some more materials exposure if they continue to take a whooping over the next few days.  The grains market is getting blown out of the water, so don’t go anywhere near the agg stocks, bu think you can buy the dip in the miners and maybe, maybe, maybe even the industrial metals producers like $TIE.

Stay nimble, three of the past 6 have been distribution days, the 115 $SPY level is obviously one that big players are selling into.  Remember that you can sell at any time and move to cash, but the biggest guys can only do it over time, that is your advantage.

I saw two more empty store fronts on the upper east side today a few blocks down the street.  Madison Avenue is a disaster, once the home to overpriced upscale boutiques, now retail vacancies all over the place.  Between 65th and 68th I counted 10 vacant lots.  This was the PRIME retail space serving the uptown ladies who lunch a few years back.  Even the richest still aren’t spending, unwilling to spend 500$ on a pair of sunglasses or 2,000$ on a suit.  When stores stop disappearing from Madison and start filling those empty windows, I’ll start believing the consumer is back.

I hate saying I told ya so, but did you see the $PALM numbers this week, uuuggggllllyyyy.   Sales are down year over year, and this is after releasing the Pre and Pixi.  The smoke is lifting and the mirrors are being shattered.  This company is royally fubar.  $RIMM killed earnings and sold one hell of a lot of phones, frankly this took me by surprise.  I wasn’t on board with the $RIMM doom and gloomers, I see them more like I see $MSFT, stuck in neutral, piling up cash with no real vision of the future.  Remember, in this business, if you’re not inventing your dieing.  The Bold is an excellent device, and enterprise users love it.  But on the retail side they are falling behind $AAPL and the soon to be released $GOOG Nexus.  The Storm is a piece of crap, I don’t know anyone who doesn’t wish they had gotten an iPhone instead.  Look for the $AAPL numbers to be out of this world, if they’re not, oh boy, can you say blood bath.

Into the new year I still like certain consumer goods companies who sell excellent products at decent prices.  People still need to buy shit, they are just buying smarter.  Here are your winners, all good investments: J-Crew $JCG, Urban Outfitters $URBN, Ralph Lauren $RL, Whirlpool $WHR, Green Mountain Coffee Roasters $GMCR, Tupperware$TUP,  Lululemon Athletics $LULU, Treehouse Foods $THS, Diamond Foods $DMND, Amazon $AMZN, Costco $COST, Colgate $CL, Whole Foods $WFMI, Apple $AAPL, and a host of foreign retailers.

Here is your weekend reading:

If you read one this this weekend, read the mobile internet report from (Morgan Stanley)

Has Exxon $XOM finally woken up to the reality of depleting oil reserves (Gregor McDonald)

This is one of the best pieces of writing I’ve read in a long time (Chris Nelder)

To all of those who believed we went to Iraq for the oil, you people were cynical idiots (Washington Post)

Has China embarked on its own green power moon shot (New Yorker)

Here it is, the $GOOG Nexus, the first phone that will take a bite out of $AAPL iPhone (TechCrunch)

What happens if the banks need another bailout down the road (Washington Post)

The military and state department realize the issues in AfPak, now do they have a strategy to deal with them (Thomas Barnett)

Goldman Sachs $GS is betting on global warming, rule #1, don’t bet against Goldman (New Republic)

I can’t believe how badly the treasury screwed the pooch on their Citibank $C sale, oyyyy (The Atlantic)

Glass-Steagall needs to be reinstated, I am 100% for it (The Big Picture)

]]> http://www.leighdrogen.com/weekend-reading-11/feed/ 0 http://www.leighdrogen.com/stock-pickers-delight/ http://www.leighdrogen.com/stock-pickers-delight/#comments Tue, 15 Dec 2009 05:52:05 +0000 Leigh Drogen http://leighdrogen.com/?p=1301 The market has gone absolutely nowhere in over a month, oscillating around a rising 20 day moving average.  While the broader indices continue to churn, some excellent setups to both the long and short side have revealed themselves.  Instead instead of focusing on the direction of the overall market tonight, below are a bunch of the best setups i’m seeing right now.  Many of these charts come from my momentum watch list, they aren’t necessarily the best performing stocks in the list, but the ones with the best risk reward setups going into trading tomorrow.

Sugar has broken out from a multi month consolidation in a big way. CZZ is a sugar play that should see the momo come in above 8.20

Get long above 25, pretty simple ascending triangle formation.

Red Hat broke out today but still looks like a good entry, stop out below today's low. This is also a major takover candidate. ORCL and IBM also on the momo list.

USO has come down onto the 200 day moving average and looks to be finding support. I would not get long until it hops above the 5 day moving average, but taking a stab in here with a stop below last Friday's low is a nice risk reward trade. The stochastics are very oversold.

Nice bull flag above the 50 day moving average. Get long on a break of the upper trend line.

Another ascending triangle pattern, get long above 17.75

RINO coming off major trend line support and the 50 day moving average. We've seen this tock take off twice now in the past few months after coming down to the 50 day. Get long right here with a stop below Friday's low.

VRX looking very similar to RINO, nice moves off the 50 day, get long here with a stop below Friday's low, or be a little more patient and wait for a break of the downtrend line.

CERN giving a nice opening to get long here off a break of the downtrend line. Looks like CERN just put in a big two month bull flag.

My system trade on GLD now has a stop one cent below Friday's low, for a great gain. But I would be tempted to step in here and take more shares with the same stop. The stochastics are very oversold, the trade may just be for a bounce, maybe 3 or 4 points, but the risk reward looks great.

STT one of my favorite shorts here, stop out above Friday's high.

CPLA needs to break 75.

GPN bouncing off the 50 day moving average with rising stochastics out of a bullish wedge formation, get long right here.

NFLX finding support at the 50 day, get long on a break of the downtrend line and stop out below the 50 day.

TUP looks like a good long entry above 49.20, stop out below trend support.

I’m looking for a test of the 50 day moving average now which will be found around 107 on the $SPY.  This area is also in confluence with the uptrend channel lower trend line.  A test of the declining 5 day moving average will be crazy important tomorrow, I believe it will fail.  If you have a lot of long exposure watch the action there closely and exit on any weakness.  I will also be looking for very specific short setups on a failure.

I’ve been pounding the table for a few weeks now on the fact that you should be decreasing the time frame on which you hold positions.  The market is obviously in either a consolidation or distribution pattern where breakouts will fail in both directions.  If you have gains in an issue, on either side, take them!  Continuation patterns are failing and will continue to fail until we break from this range.

I pared back more long exposure in my momentum book today cutting loose $CTSH, $CAT, and $GMCR.  I did though add to my position in $TUP.   I’ve built a 21+% cash position now and will look to use some of it down around 107 on the $SPY.  I’m stalking energy and material names, and would love to add a little more to $JCG if the broader market cooperates.

Vegas awaits…..