Three Stocks to Buy, 397 to Sell or Avoid
By Jeff Clark
June 16, 2009
My Saturdays always start off the same way... I wake up a couple hours before the rest of my family, fire up the computer, and spend a good chunk of the morning scrolling through stock charts.
It takes about 2½ hours to run through the 400 preset charts in the program. In the end, I have two decent-sized lists: "potential stocks to buy" and "potential stocks to sell." From those lists, I carve out a handful of trades for the next week.
On an average week, the lists are even. I find about as many "buys" as "sells." However, every once in a while, usually after the market has trended too far in one direction for too long, one list will have maybe four or five times the number of names as the other.
But it's never been as lopsided as it was on Saturday.
The buy list only contained three names. Everything else was either sell or "avoid." (I avoid charts that need more work or more time to set up.)
United States Natural Gas Fund (UNG) was the best-looking "buy" chart. I've written about the bullish appearance of the natural gas chart before, so it was no surprise to see UNG pop 7% higher in a bad market yesterday.
The other two stocks on the buy list were inverse exchange-traded funds. These are stocks that go up when the market falls. Of course, they had a good day yesterday, too.
It was the sell list, however, that was most interesting – not only because of the sheer size of it, but also because it contained stocks from every sector of the market.
Banks and financial stocks were prevalent on the list. So too were homebuilders. Technology companies, retailers, and oil stocks made the list. Even gold and precious-metal stocks, which usually run counter to the broad stock market, looked like "sells."
Here is what a "sell" looks like...
This is a chart of the S&P 500. Yesterday, the index broke down from a bearish rising-wedge pattern. The pattern was formed on contracting volume (the green bars) and with negative divergence on the moving average convergence divergence indicator (the bottom chart).
This is about as bearish as a chart gets.
After yesterday's drubbing, short-term conditions are a bit oversold. So maybe stocks will get a little bit of a pop and push the index chart back up to test the breakdown level. But over the next few weeks, stocks are headed lower.
And with so many individual stocks exhibiting the same pattern, this could be a terrific summer for short sellers.
Best regards and good trading,
Jeff Clark |
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| • |
Emerging market stocks hammered yesterday... Templeton Russia fund down 13%. |
| • |
Natural gas rebounds 6.5%... back over $4 as speculators pile in. |
| • |
Obesity drug player Arena Pharmaceuticals up nearly 9% yesterday, 116% in the past two months. |
| • |
Earnings today... Adobe Systems, Best Buy, Smithfield Foods. |
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Last |
Change |
52-Wk |
| S&P 500 |
923.72 |
-2.38% |
-32.08% |
| Oil (USO) |
38.52 |
-2.31% |
-64.73% |
| Gold (GLD) |
91.10 |
-1.16% |
+6.14% |
| Silver (SLV) |
13.83 |
-5.47% |
-15.31% |
| U.S. Dollar |
80.57 |
-0.68% |
+9.46% |
| Euro |
1.39 |
+0.85% |
-10.10% |
| VIX |
30.81 |
+9.45% |
+45.19% |
| HUI |
334.99 |
-4.19% |
-15.90% |
| 10-Year Yield |
3.71% |
-0.08 |
-0.48 |
|
| Company |
Sym |
Industry |
Tianyin Pharma |
TPI |
pharma |
BioDelivery |
BDSI |
biotech |
Alpha Pro |
APT |
medical devices |
NeurogesX |
NGSX |
pharma |
Sunoco Logistics |
SXL |
pipelines |
Spectrum Pharma |
SPPI |
pharma |
Compellent |
CML |
data storage |
Saba Software |
SABA |
software |
Todd Shipyards |
TOD |
shipbuilding |
ClickSoftware |
CKSW |
software |
99 Cents Only |
NDN |
dollar stores |
Endologix |
ELGX |
medical devices |
Daily Journal |
DJCO |
newspapers |
Ohio Valley Banc |
OVBC |
bank |
|
| Company |
Sym |
Industry |
National Penn |
NPBC |
bank |
Tutor Perini |
TPC |
construction |
OSI Pharma |
OSIP |
biotech |
S&T Bancorp |
STBA |
bank |
Susquehanna |
SUSQ |
bank |
|
|
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