Weekend Update

The markets closed higher again this week. The SP500 reached a new 5 yr high and closed at 1502. If we look back at the past 35 years for the SP500, we see we are now approaching the all-time highs. This should prove to be a stiff resistance zone. Although I think we will move to all-time new highs at some point this year, now is a time to be more cautious until we see a breakout or consolidation from this zone. That doesn't mean sit in cash, but it does mean we are at a higher risk for a downside move.

Part of the reason I believe we will reach new highs has to do with the sentiment behind this market (how people feel about it). This market is generally hated. The retail investors (all us little guys) have largely not been participating in this significant up move. Most feel the market is very risky and a suckers gamble. All the while stocks continue on to test new highs.

Remember back to the prior highs, 2000 and 2007; the dot.com bubble and the housing collapse respectively. In 2000 investors believed that stocks could never go down  and anything that ended in a .com was an automatic gold mine. In 2007 it was widely known that houses in America NEVER do down. Both symptoms of irrational euphoria. As you can see, irrational euphoria will end and panic ensues. The nice thing about where we are now is that most people feel that Europe is a risk, China's growth is slowing, the US has financial crisis issues, etc. Lots of fears! Fear is great for the market, it is what drives prices higher. Fearful investors are under-invested investors, with lots of money to buy more stock with, should the dangers clear.

Enough rambling, lets take a quick look at our top 10 picks after week 4 of 2013:

HAIN

Price has broken out from its downtrend resistance and has gotten above its prior support/resistance level at 57.00. I am very constructive on this stock right here, with a stop below 54.00. They report earnings on Feb 5 and this could very well regain its upward trajectory. Also the volume has seriously picked up in the past 2 weeks. Investors are accumulating the stock.

AAPL

Q4 Earnings disappointed the street this week and this stock remains in free fall. Stay far away for now. Always remember: its never too late to sell. If you set a stop, stick to it!


MOS

MOS on Friday broke and closed above the Inverse Head/Shoulder pattern on heavy trading volume. We want this to settle out here a bit and consolidate this recent gains between 60-63. Pullbacks into this price zone can and should be bought as long as price stays above $60.

HD

Home Depot continues to make new all-time highs. You can buy this on any pullback. Just really strong action this week.

CMI

Cummins continues to see really strong action. With earnings in a week and nearing resistance levels I couldn't fault you for taking some profits here. But If the $118 resistance can be taken out, we could see new highs and a move to the upper end of the channel.

F 

Ford pulling back here and testing the 20 Day Average. They announce earnings for Q4 this week. Any pullback to the 13.00 level is constructive consolidation and should be bought. Place your stop just below the 12.90 level.

WFC

Wells Fargo just chopping along right above the key long term resistance area. As long as we are above the $34 area, Wells is in fine shape. Just taking a rest here, lets see if if can continue higher. So far, so good

PBW

Our clean energy play has broken out of its flag pattern and we are expecting it to continue to trade higher. This is a strong buy above 4.25.

DDD

3d Systems continues to rip to new highs. I'm hoping we are seeing a short term top or consolidation here. I would love to get into this one on a solid pullback.

ENB

Enbridge pulling back here a bit. I would like to see this retest the 42.00 level. If that holds, expect a run to the upper trend line.