Top Trade Ideas for the Week of January 10, 2011, #6-10

After looking at over 700 charts, I have found some good setups for the week. This week’s list contains 9 long ideas, and 2 short setups.

Here are the next 5 ideas for the week:

6. Altera, Ticker: ALTR

Altera has been in a consolidation pattern the last two weeks after a move lower off of the highs of early December. Notice that the Relative Strength Index (RSI) bottomed over 50 and has been moving sideways, still in bullish territory. Also the Moving Average Convergence Divergence (MACD) indicator has been improving since the consolidation began. These factors suggest a move higher soon is possible. If the price can rise above 36.75, out of the flag, then it will see resistance higher at 38 on the way to a target of 44 to complete a symmetrical measured move.

7. Linear Technology, Ticker: LLTC

Linear Technology has been in a long bull flag for over 3 weeks between 34.25 and 35, roughly, after breaking the rising trend line. Having tested that trendline again over the last two days and held, it may be ready to move higher. The MACD indicator has been improving the last few days adding weight to a potential move up. Look for a break above 35 to run higher with a target on a measured moved of 39.

8. Diamond Foods, Ticker: DMND

Diamond Foods fell from its highs in mid December and has been basing in what some might call a bear flag. However during this consolidation the RSI bottomed above 50 and is now holding and the MACD indicator has begun to improve. These indicate a potential move higher to come. resistance will be found on the upside at 54.50 and then the previous high near 56. If the consolidation fails and price falls below 52 then it could be a good short to the 48 top in November.

9. Darden Restaurants, Ticker: DRI

Darden has been basing lower for the past two weeks. Some might call it a bear flag and suggest a move lower, but a closer look reveals that the RSI has bottomed and is now moving higher, and the MACD indicator is improving, with a positive cross likely within a few days. Using 46 as a stop, there is opportunity higher with first resistance at about 48 and then the December double top near 50.

10. NYSE Euronext, Ticker: NYX

NYSE Euronext has been in a bull flag for the past week after its move higher. That move brought it out of the Bollinger band range and it is now back inside, and has also worked off some overbought condition on the RSI. The MACD indicator is improving adding to a bull case. Look for any break of the flag higher above 31.25 to see initial resistance at 33 from the April high, before moving higher.

Bonus Idea to follow tonight, stay tuned.

#1-5

These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which looks like more pain for long holders of Gold and Treasuries, but brighter for the US Dollar index and Crude Oil. Emerging markets look better higher with perhaps a slight pullback. Neither the Chinese market nor the Volatility Index look to play a factor in influencing the US markets. SPY and QQQQ look like the best of the US market Indexes, with strong bullish charts where as the IWM may need to pullback some before it can join them higher. A review of the sector charts within the equity markets shows the Winners to be Industrials, Technology and Health Care and the Losers on the Battlefield to be Materials and Consumer Staples, a clear rotation, with the rest battling at the Front Lines for the time being.

(As always you can see details of individual charts and more on my twitter feed and on chartly.)

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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