Sunday, September 22, 2013

Stock Market Outlook and Setups for Week of September 23, 2013 - "Still Looking Good"

We saw another strong week on Wall Street as the Fed gave the market what it wanted with no tapering and the market acted accordingly.   Wednesday was a great day, and although the markets pulled back slightly on Thursday and Friday, that was completely expected and understandable and many individual stocks continue to put in great gains.  This continues to be a strong market overall. 

The major indices all still look fine on both a short and long-term basis.  The S&P is weakest of the three based on Friday's action, but as long as the indices close above their nine day exponential moving averages, you have to remain bullish and patient. 

 Russell 2000
 S&P 500

My "Terrific Twenty" list was easier to narrow down this week than last as I didn't see as many overall setups in my scans, and that eliminates a lot of potential candidates.  Overall, the recent trends hold true - internet-related stocks, Chinese stocks, etc.  As it is, the stocks in this week's list are all acting very well and until I see some clear distribution in these names with moving average breakdowns, I see little reason to be bearish about anything.   Not many of these are at safe buy points as of now, but my three core long positions (had four but got shaken out of FB on Monday) are in this list and it pays to focus on these names for any new buys going forward.  Some may very well set up soon with a bit of rest and go much higher.


Here is a quick spreadsheet view with some of the data I use with the Terrific Twenty as well as how I have them ranked this week.  This is a project I continue to fine tune and work on but I find it to be a great drill and forces me to really look at names and study who the true leaders are.

As I just said, I didn't see as many long setups in my scans this week, but perhaps that will change if the market can rest a few more days.  There are a lot of extended individual names out there simply due to the strength of the market the past two weeks, so hopefully you are already invested and have been holding strong names and making some nice gains.  The names I do see this week are shown below.

Good fundamentals - CSTE AMBA OSTK CAAS
 More Speculative Names - OSIR RSOL ANAC IQNT

One name that I have been watching for a few months now as a potential bottoming play is SKUL, and it popped on Friday on heavy volume and has my interest.  That volume pop may have been options related, but it did clear some important resistance around $6 and has been moving sideways for a while with very little selling volume.   Fundamentals don't look good (which makes sense given the chart) and they are not expected to improve until 2014, but just keep this name on your watchlists.  If it flags here above that former resistance, it might be worth tucking in an IRA as a long-term play. 

SKUL Daily
 SKUL Weekly
All Charts from TC2000, Courtesy of Worden Brothers, Inc.

Overall, things still look good although chasing longs that are extended is never a great idea.  Hopefully, you have been establishing positions over the last few weeks and are holding them.  I think the market could consolidate further or even pullback a few percentage points, which is why I still have a large temporary hedge on via SQQQ, but any pullback may not last long with the quarter ending over the next week.   September is traditionally a poor month on Wall Street, but it has been great in 2013.  Let's hope it ends on a strong note.  Best of luck in the week ahead. 

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