Top Trade Ideas for the Week of May 14, 2012: The Rest
- Posted by Greg Harmon
- on May 13th, 2012
Here are the Rest of the Top 10:
Allstate, Ticker: $ALL
Allstate, $ALL, moved over resistance at 34 and has consolidated in its strong trend higher. It is now in an area that has very thin price history until 37.50. The Relative Strength Index (RSI) is bullish and rising with a Moving Average Convergence Divergence (MACD) indicator that is also growing more positive.
WW Grainger, Ticker: $GWW
WW Grainger, $GWW, is pulling back after topping at 220. The strong red Marubozu candle Friday, through the 23.6% Fibonacci level, bodes for more downside with the 38.2% retracement of the move higher at 183.53 below. The rolling Simple Moving Averages (SMA), falling RSI and negative MACD also support more downside.
Joy Global, Ticker: $JOY
Joy Global, $JOY, hit the skids in February and has been trending lower since. With an RSI that has moved into a technically oversold condition it is time to look at it more carefully. The MACD is negative but starting to improve, a divergence. The previous low from October stands as a last support before disaster lower. But the consolidation the last week between 64 and 66 could be the base for a reversal. Look both ways, but wait for a break of that base.
Nike, Ticker: $NKE
Nike, $NKE, moved from a 8 month long trend higher to a consolidation over the last 2 months with a clear floor at 106. The RSI is turning back higher so a run to the top of the channel may be in store. But the MACD is continuing to run lower, supporting more downside or consolidation. Watch this one both ways as well.
Tractor Supply, Ticker: $TSCO
Tractor Supply, $TSCO, pulled back to touch the 50 day SMA after nearly a month consolidating under resistance at 100. Heading back higher again it has support for more upside from the rising and bullish RSI and an improving MACD. Look for a break over previous highs as a long entry.
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After reviewing over 900 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Saturday which after a dose of family for Mother’s Day the reality of a continued bearish bias will take hold. Gold and Crude Oil look better to the downside with the US Dollar Index and Treasuries looking to continue to strengthen. The bullish flirtation of the Shanghai Composite may be over while the pullback in Emerging Markets continues. The Volatility Index is building pressure to move higher as well. These influencers set a backdrop for the Equity Index ETF’s to continue to the downside. The chart of the QQQ agrees whole-heartedly while the SPY and IWM are mixed with the intermediate term view continuing to hold steady. New highs by Treasuries or the Dollar Index will likely knock everything lower, while a pullback in bonds and the Dollar would provide a floor. Use this information as you prepare for the coming week and trade’m well.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)