I have also redrawn the uptrend line from Nov to now. With the strong bounce last week I think we can say that the current positioning of this trend support is legit. Again though, we are mainly going to be concerned with the horizontal support at 1538 as our sell signal. I made some small additions this week in my accounts but nothing major. For me to get comfortable again, I will need to see this upper channel resistance taken out as well as the prior high being eclipsed. In context of the intermediate term trend, we are still being held within the upper boundary and struggling at this level. I think it would be a great sign if the S&P chops around above 1570 for a couple days and proves it can hold these levels, then it will be primed to move higher.
A few notable changes to our focus list occurred this week. Here are the updates:
PBW-Clean Energy
PBW rallied strongly this week and was able to break above the right shoulder resistance of our short term H/S Top pattern that we have been tracking for several weeks, effectively killing the setup (which is good!). Looking out at the longer term view, the key level now will be the $4.85-4.90 area. This level is prior support, now resistance from the lows in late 2011 and is the prior swing high from February. We are also seeing what appears to be an inverse head/shoulder setup forming. This is something I have alluded to previously as a possible setup, but now it seems to be forming nicely. If this breaks out our initial price target would be at the $6.35 level for a projected gain of 30%. This would also be a key trend shift in the clean energy space that could lead to much more significant gains in the future. Stay tuned on this one.
HAIN- Earnings Thursday May 2. After Market Close
HAIN has broken out of is 6 month consolidation base and inverse head and shoulder pattern. As you know, we have been waiting for this move for some time now and this week we saw strong action. With earnings due out Monday afternoon, it will be interesting to see how this pattern anticipates the announcement. I am a long term holder of HAIN and added to my position on the breakout Tuesday. I am currently holding 2/3 of a full position here and after earnings I will determine if I want to get fully invested here. If it weren't for their earnings release I would have gotten fully positioned this past week, but since earnings can be such volatile events, I am choosing to keep some powder dry just in case this doesn't come together as I had planned.
Excellent, excellent setup here! Stop below $59 and right shoulder low.
F-
Ford announced a killer quarter this past week and shares are now breaking out above the 4 month downtrend resistance. This move is still in the early innings I feel as the intermediate term trend looks great. This was another position I added to this week.
DDD
DDD is attempting a breakout of the intermediate triangle resistance ahead of its earnings due out Tuesday. I added to my position on this breakout as well. As long as the uptrend is intact, I will be positioned strongly in this space.
As for the rest of our stocks to watch, not much changed this week. The winners are still holding trend and the laggards still have more work to do.
A couple interesting charts I have been watching and like very much at current levels are CSX and ARUN:
CSX
I have loved the railroad stocks for some time now (being a boy, I guess I have always just had a love for trains) and I have been looking for good setups. Looking at the long term chart of CSX, it has recently broken out of a big 18 month base and is consolidating perfectly just above $23. They also just reported a great quarter this past week. Strong buy long term but keeping a close eye on the $23-22 support level. I will keep you posted on this one as I recently initiated a position and think it will be a clear winner going forward.
Another interesting chart that has grabbed my attention this week is Aruba Networks (ARUN)
Another long term view here. ARUN looks to be putting in a sort of reversal pattern. Seeing that the neckline is slanted gives me some pause as the pattern isn't quite perfect, but needless to say the implication of a bounce from current levels could be big based on the setup. I also initiated a small speculative position here. Fundamentally ARUN could raise some eyebrows with traditional valuation metrics, but their EPS growth for the past 5 years has been strong and quarter over quarter was monstrous. They also sport very strong gross margins and no debt. Interesting prospect going forward.
While it is nice to have lots of cheery prospects on your watch-lists, it is always prudent that the overall market health is conducive to your portfolio allocation. As of the close Friday I am at a 50% long stock position, 20% treasury bonds, and 30% cash. While I put some money to work this week as the price action dictated, the TLT position held up very well while the broad markets rallied strongly. This has me slightly concerned mainly because historically treasury bonds and stocks have moved opposite to one another. This certainly doesn't mean they cannot move up together, but it should raise at least a yellow flag, if not a red one.
We will continue to watch how this bounce develops and if it can hold or not. If there is a major change to the current market environment this week, I will certainly let you know. The biggest things right now to watch will be the SP500 levels of:
1,538- current trend support and most recent low
1,597- current all-time highs for SP500
As long as we are between those levels, the market gyrations are simply noise and of no real consequence. It is a break from that range that will be important.
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