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A crazy week that basically ended up 3.4% taking back the prior week’s 3.5% losses in the SP 500 index. Lots of volatility with the combination of Tax selling and year end positioning, FOMC meetings, Oil gyrations and geopolitical turmoil in Russia. The bottom line though was we said last weekend to look for 1980 to be a support area and a 38% fibonacci retracement pivot before a Santa Claus rally. The market bottomed at 1973 and the Santa rally ensued with vigor. We closed the week not far off the all time highs. We are looking for 2133 as our intermediate pivot resistance target for the SP 500 ahead.
Some additional market metric notes include the NYSE Short interest declining dramatically over the past few weeks to 12 month lows. At this point we are not sure if that is bullish or bearish, but we read it for now as bullish. The percentage of bullish advisors is also only at 49%, whereas the highs in the 4th quarter were approaching 59% at one point and as high as 63% in 2014. We read that as neutral to bullish. The fear gauge as tracked by CNN hit 2 year extreme lows on Wednesday this past week, and from there we had a sharp rally. We continue to keep an eye on the big picture by looking at the NYSE index currently at 10,890 and the highs to take out are 11,108 made in September.
At the SRP service we took gains in EXAS at 17% and a few other stocks at 7.5% swings on each. We also initiated a new position in a post IPO stock AVOL late in the week which rallied up about 5% for us as Oil turned up on Friday. Consider Joining our premium members in whipping the market with great swing positions and long term plays sprinkled in.
This week we have a 1/2 day on Wednesday and a closed day on Christmas Thursday. So only 3.5 trading days this week, and Friday will be a light volume day of little consequence. Effectively a 2 1/2 day trading week.
We have some notes on a list of stocks that appear attractive and a few of which are likely to hit our Alerts at some point near term.
CTLT- We actually traded this one already for gains we took over a week ago, but it continues to consolidate in a 4 week base pattern.
RH- Restoration hardware is turning the retail business upside down. We last commented on this one many weeks ago in a weekend report around $84. After a strong quarterly report the stock is at all time closing highs now on what looks like a Cup base without a handle. If the stock pulls back decently its probably a buy in the $90 ranges.
CSL- Carlisle companies is in an 8 week base and looks poised to run to highs
HTLD- Heartland Express trucking company is in a 5 week base near highs and this sector is heating up with lower gasoline prices.
EA- Electronic Arts is in an 8 week “ascending” base pattern, and these can be powerful. We profiled it briefly a few weeks back in a weekend report about 10% below current pricing, which is near 52 week highs. Management has done an amazing job of changing the strategy for gaming over the past 12 months or so and its paying off.
FB- Also nearing a possible 6 month plus base breakout. Facebook is spending more money and will see a reduction in profit growth ahead but at the same time innovation and ROI for the ad’s they producer for their media buyers is making them extremely profitable and fast growing. We first wrote it up at $28 on Seeking Alpha as bullish in 2013 when the world hated the stock. Now nearing $80 it may be a buy soon again for a breakout.
OSUR- Healthcare/Med equipment firm breaking out of a 6 month base to highs
EIGI- We had this on the list a few weeks ago, it pulled back hard and then popped 19% to 52 week and all time highs last week. The company provides cloud-based services such as website design to help small and midsize businesses succeed online. 59% profit growth expected in the 4th quarter to 24 cents per share, stock near $19
VRX- Valeant Pharmaceuticals looks like a possible 10 month base breakout coming on a cup and handle formation
SCOR- Also on the weekend edition a few weekends back, it sat around and last week finally broke out of a 4 week base to new highs. ComScore is a leading internet technology company that provides “Analytics for a Digital World”.
Best to your trading this week ahead and a Happy Holidays period to you and your families.