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