Tuesday, April 22, 2008

A Few Charts to Watch

Blogger wouldn't let me post any charts earlier so here is some of the breakdowns I wrote about today. This type of action in strong stocks is not a good sign for the overall market.

Major Breakdowns TodayCharts from Telechart2007, Courtesy of Worden Brothers, Inc.

Here are some of the charts I am watching right now on the long side. I still am not real excited about any of these, but it is good to see a stock like ASTI put in a strong day today. Unlike two weeks ago, when most of the charts I was watching were very green with high BOP levels, these are more yellow, which is one of the reasons I am not jumping all over these.

Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

This next group of charts are all from the energy sector and would only be taken as very short-term momentum trades of one or two days, with stop-losses below the short-term moving averages they are sitting on right now. The groups are in dire need of a rest but don't seem interested in taking one. If by some chance they do in a calm manner for a week or so, I would be jumping on these. As it is, it would be stupid to start long-term positions in this sector with it being so extended, but I expect the momentum to continue to push this and other commodity sectors upward for another week or so. If you follow those tight stop-loss levels, the trades are not as risky, but if you don't get out immediately if they break these support levels, you can get into big-time trouble. Because of all the hot money in these commodity stocks, I don't expect the eventual pullback to be calm. These stocks are in some cases going parabolic (more the ags than the oils) and may be starting into climax-type runs. If that happens, some quick swing trades might work. Just have your finger on the sell button.

Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

My scans didn't change my current outlook of being slightly bullish. There are several things that do worry me, however, and if we get another few distribution days, that may signal this rally is running out of steam. We are approaching the end of April, and with it the start of the traditionally weaker time of the year for stocks. I guess we'll find out soon if the old axiom "sell in May and go away" holds true this year. Good luck tomorrow.

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