Thursday, May 1, 2008

Will Commodity Stocks Hold Support Levels???

Here are a few of the breakouts that I saw today or stocks that are setting up some nice patterns. There was a lot to like in my scans tonight in terms of individual stocks. The only thing I didn't like was that solars got hit pretty bad and charts like FSLR and CSIQ don't look very nice anymore. In this first section, I like CSR and would consider buying right here, but it announces earnings on Monday, so I am hesitant to do so.


CNQR, CSR, CDS, VISN
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.


The shippers put in some nice moves last week and are now resting on lower volume. These charts aren't as green as I would like to see, but I would consider these right here, particularly DRYS and DSX.


DRYS, DSX, EXM, TBSI
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.


I have highlighted the stocks below in the past week or so and after today, I would consider taking positions in some of these and may do so tomorrow morning depending on what the jobs number and the reaction to it looks like.


CYBS, MATK, JST, NUAN
UYG, APWR, BMRN, PWRD
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.


This group of charts has had nice breakouts and are digesting their recent gains nicely, forming flag patterns that I would consider entering. These probably could use a few more days of rest.

EW, GDI, DECK, WGOV
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.


I am putting some commodity charts in here simply because many are now at levels of support (the 50 day moving average) in which institutions traditionally come in and start buying. If these levels don't hold, then I would have to think these stocks are indeed done for the next few months. However, from my perspective, I think the selloffs in January looked much worse than the selloff of the past week. If you are a long-term bull on commodities or you have little faith in the Fed's ability to fight inflation, it might make sense to take a chance on some of these with stops below the 50 day moving averages. These are the steel and agriculture stocks.


MTL, CF, POT, MOS
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.


These are the energy stocks. Compared to the ags, the oils are holding up much better, although there have been some blowups in this sector as well. The first group I have here are stocks that have barely sold off at all, and perhaps these are the ones to focus on if the energy sector heats up again.


XCO, BEXP, REXX, MCF
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.


This next group of energy stocks have pulled back more but are still holding at or above their 50 day moving averages. This is where support should show up. If it doesn't, watch out.


DRQ, FST, ECA, ATW
HES, NGS, APA, RIG
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.


It is still a little risky to take positions here, but might be worth it. We are probably still in the uncertain, post-Fed phase and it would not surprise me at all to see the market head lower tomorrow if we get a worse than expected jobs number. Today was definitely nice but it sometimes takes several days for the true trend to emerge. Based on the recent action in commodities and the dollar, it appears that traders are hoping the Fed will indeed be able to hold for a while on rates. However, if we start getting some poor economic numbers, then that sentiment could change quickly, as the Fed did supposedly leave the door open to more cuts if needed in their statement. Tomorrow should tell us a lot. Based on the charts I see, things look bullish and we should head higher. Hopefully we will, but we all know things rarely turn out the way you want in the market. Best of luck Friday.


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