No Catalysts Leave STX Shortable

STX is coming up to resistance which should prove very difficult to overcome. As you can see on the chart the stock has already topped out at this level twice and should do so once again. The stock does not seem to have any catalysts coming it way any time soon as well, as earnings have already occurred and tech season has seem to run its course for a bit. Also, according to Yahoo.com, SVP, COO, and CTO are all selling their shares here at this level.

I would look to short the name right around 27.50 and give this one a little more room as far as where to place a stop loss. Reward potential is 7 dollars to the downside. Respect that possible gain when placing your stop.

CM

MNST is a Buy

MNST, which reported an outstanding quarter only a few days ago, has popped since. I however, along with Mark Maheney (internet analyst at Citi), believe the run is not nearly done.

Maheney is currently looking for the stock to run to $51 in the intermediate term with little downside. "The market essentially is discounting a U.S. jobs recession next year and (assuming) that Monster's North American revenues will decline 20%," Mahaney says. He argues that such a scenario is too dire, and that Wall Street isn't giving Monster enough credit for the ongoing shift in help-wanted advertising to the Internet and the strength of its international franchise.

Looking at the chart, I definately believe the run he projects fundamentally is feasible techincally. If you drew a trendline down from the last two tops, it would project resistance for MNST at $50. The stock is currently at 39.50 and is turning up from a solidly built bottom.

I would look to buy the stock on any sort of dip (like today) and build a position right here right now.

The upsides too much, the downside is too little.

CM

CELG Holds a Weak Hand

CELG is weak, there's no doubt. Eventhough, the bounce off of its 200 sma was strong, it should be nearing an end very soon.

Triple Top or Channel? TRLG is Worth a Look

I've mentioned this stock recently on here, but felt that I needed to explain the situation better than I have previously. TRLG, as shown by the 3 year chart posted above, has found support at the 15ish level for close to two years now. In the process, the stock has also hit the same high at 24 three times now. These are conflicting signals. On one hand this chart could be percieved as a triple top to conclude the rally that preceded '06. On the other hand, this pattern could be seen as a consolidation of gains in the form of a sideways channel.

Either way, even though I would lean to the side of consolidation, I believe the stock is worth watching as it comes down to support. As a play on this stock, you could buy at the 15ish level and keep a stop below support. If this support level broke, I would definately think about turning the trade around and shorting the stock.

CELG's at 60

CELG has successfully dropped to where I predicted, its 200 sma. I would look to cover right here right now. If there is a strong break of the 200 sma, this stock has a while to fall, so be prepared to short once again. Or if this stock bounces off the moving average, i'd wait just a bit and short again because it is doomed to hit the 200 sma very soon, once again.

CM

CELG Down, EMC up in Premarket

CELG is proving to be a great short trade. The stock is currently trading around 64.20ish in premarket trading down from its 70.18 closing price. This stock is coming down to its 200 sma around 60 dollars. If you covered any of your short in the days previous to now, I would put the short back on today. This stock has too much downside not to.

EMC is up in the premarket. Two catalysts provoked this stock higher. First, VMW, the firm EMC spun off a stake in that has done stunningly well in recent weeks, reported earnings that were substantially higher than estimates. Second, EMC itself reported this morning and beat on topline revenue and matched on bottom line EPS. I'm currently waiting for the conference call. As long as EMC can hold the gains here, I believe it is headed much higher still.

CM

Wrap Up; SFLY, OMTR, ADI, CELG

It was a wild ride on the street today. Stocks came down to the point where the Nazz was down almost 80 points. Then a nice W bottom formed later in the day and the losses that were built earlier were mostly erased. Treasuries continued to rally and yields came down once again. Looking at a chart of 10 year note yields, it really looks like this action could continue and we could see the 10 year yielding 4 percent in the next few months.

I have a couple stocks I've been watching as of late.


ADI's chart is a beautiful thing. I saw the large triangle as it was forming and pointed it out on this blog. As the triangle broke the short trade was on and it has worked wonderfully. Using the triangle as a tool for measurement, ADI should eventually find its way to 31. However, now that the stock has had several down days in a row and RSI is beginning to show oversold levels, I believe it is time to lock in some gains. A quick 8-9 percent is nothing to laugh at.


CELG is another stock I recommended shorting recently. I also recommended in the last few days to take some profits in this name. 68.50 would've done the trip as a cover point today. If you haven't covered, I would recommending covering at least half and waiting for a bit to put the position back on.


One of the new names I'm looking at is SFLY. SFLY has continually bounced off a level at or around its 50 sma in the past. I believe it will do so once again once it nears the 50 again. Right now, it is on its way to the entry point. I would look to enter this trade at about a 5 cent premium to its 50 sma. The stop out point should be a bit more flexible with this stock as it has a tendency to break and then climb. Therefore, I would think of a percentage you're comfortable losing and setting the stop using that method.


The last new stock I'm looking at is OMTR. OMTR has a pattern that is very similar to SFLY's. I would look to play OMTR exactly like SFLY. Buy right off the 50 sma, give with it to an extent, and look for it to come off that level and go higher.

That's all I got for now.

CM

CELG Overextended on the Downside in Near Term

Celgene, which i recently recommended shorting, is becoming overextended in the very near term on the downside. The stock is likely to hold up and consolidate on its 50 sma before heading lower once again. This is also a spot where you might take some profit (should be around 5 dollars worth right now) and let it rise some before shorting once again. Chart patterns are not set in stone and shouldn't be followed religiously.

Also, interest rates look due for a bounce, meaning that prices should begin to fall in the near term. Looking at the 10 year treasury yield chart ($TNX). The yields looks like they have support at 4.30%. However, if credit issues swing up once again, we could very well break through that level signalling higher prices and lower yields in the near future.

Markets Rally From Below

After starting the morning deep in the red, with the DJIA at one point all the way down at 13400, stocks turned course and pushed their way into the green. The Nasdaq led the major indices finishing up 28.77 points or 1.06%. The Dow also put in a solid performance as 19 out of 30 Dow stocks closed in the green. The averages now look like they are oversold after last weeks stumble and are ready for at least a small rally. With Apple reporting colossel earnings after the bell, we can expect the price action to continue upward tomorrow.

AAPL wasn't the only stock to rally after the bell. NFLX also reported earnings that handily beat estimates. They then rasied projected revenue guidance to anywhere from 297 million to 302 million dollars. In response to this news, shares jumped sharply higher and were trading at a 13 percent premium to the closing price.

So where does this leave us? We have multiple themes all playing out at once in the same marketplace. Concern over rocky credit markets has bears saying that people are underestimating the effects credit market and housing related turmoil has had on business in the US. For this reason they see earnings reports that will not meet expections and expect stocks to come down with weak reported earnings. Then you have the global growth story. Companies such as Catapillar are putting up big numbers from international markets in the face of a weak domestic marketplace. It's just further evidence that emerging market demand for construction equiptment, materials, and infrastructure is simply not going away any time soon. Lastly, you have tech. As today proves, estimates are just too low. The high flyers such as Google or Apple continue to whip the estimates and fly higher.

Right now, there's no need to dabble in the indices. Why buy the whole lot when you can get the buy the best? Plus, the indices move today is only a short recovery. We could be down again in a hurry. However, I believe you'll continue to see Apple, Google, Netflix, Intel, and Yahoo move higher. The initial pop is not all these stocks have to offer. Even if they consolidate now and maybe even dip a little, soon people will realize they're still underestimating their potential and buy them up.

I'll be back with charts tomorrow.

CM

ADI Breaks Down

As I pointed out earlier, ADI could have gone either way, either breaking up and out of its triangle consolidation pattern or breaking down and heading lower. Well, it did break down and is looking like it will be heading lower very soon. I would initiate a short position if you haven't already on the break down. The size of the triangle suggests that the move to come will be sizable and well worth betting with. I would stop out above the 200 sma at around 36.25.

CM

MDRX Coming Down to Support

MDRX is setting up to come down to support at 22.25ish. Looking at the chart, it looks like MDRX is consolidating a quick move downwards and very well could resume its downward trend very soon. The next logical stopping place for the stock would be the support level which has held it several times. If the stock gets to this level it is most definately a buy.

Buying at support gives you a very good risk reward ratio. By looking at the price action over the last 6 months you could assume that if the stock rebounds, it will likely be able to get up to at least 25 on a bounce. So, that gives you around 3 dollars upside. As for downside, you'll know you're wrong quickly. Below 22 doesn't work for this stock. Support will have broken and you need to stop out. Therefore, 3 up, .25 cent down. You should be taking that type set up all day long.

CM

CELG Begins its Decline

CELG, as I have shown previously, is channelling in and off its 200 sma as a predicatable pattern. The last time I wrote about this stock, I suggested beginning a short position in it. It is really beginning to look like I was right. As the chart shows, things are looking more grim here. A volatile top seemed to be put into place last week as buyers could not move out of the channelling pattern and the stock has now broken below its middle bollinger band. Look for the stock to continue downward from here and hold that short position strong.

CM

CELG Looks All Topped Out

I am not saying CELG is at its absolute peak right now, but it sure looks like it is close enough. That is why I am giving the go-ahead to sell or short this name, right here right now. I've shown CELG's chart up here many of times (recommended buy at 58 not but like a month ago for a nice gain). It's very clear this stock moves in a channel. Making an almost regular move up and then move back to its 200 sma. Why should this stock deviate now?

If you look at it from a risk reward standpoint, from yesterday's close you have around 8 or so bucks downside and not much upside here, maybe a dollar or two. That seems like a good tradeoff for me.

So, what I would do right here, is to layer into it a little. I'd short some now at around 72.55 then if it makes a move up a buck I'd give it a go again.

CM

Be Ready for ADI's Breakout

ADI has been in consolidation mode for 5-6 months now in a steady triangular pattern. I posted the 1 year chart and from that it should be pretty clear what I am talking about. With the market moving steadily higher, I have a tendency to believe the stock will break higher. However, if it turns the other way and breaks down instead of up, you're in trouble. Therefore, I would actually wait until the stock breaks out to buy or short. Now, that we've identified the pattern and the inevitable outcome (break out or down) all you have to do is monitor for surges in volume, news, and price. Once the stock has broken up or down you will then move with the market with a stop a little behind the breakout point.

That's all I have for right now.

CM