Top Trade Ideas for the Week of March 14, 2011: The First 5

After reviewing over 700 charts, I have found some good setups for the week. This week’s list contains the first five below, to get you started early. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Saturday which looks like further consolidation for Gold Crude Oil and Treasuries, before they can all start to move higher. The US Dollar Index looks to continue lower. The Shanghai Composite and Emerging markets also look to consolidate further with a bias to the upside longer term. The Volatility Index is looking tired after testing higher and may push lower again, but not move much from where it is now. The equity ETF’s SPY, IWM and QQQQ all look set up to continue lower, despite finishing better on Friday.

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

Here are the first 5 ideas for the week, to get you started:

American Axle & Manufacturing, Ticker:$AXL

American Axle crossed below the 20 day Simple Moving Average (SMA) February 22 and has been forming a base ever near 13 since. During this basing the Moving Average Convergence Divergence (MACD) has been improving and is now about to cross bullishly and turn positive. The Relative Strength Index (RSI) has also bottomed and is slowly moving higher. If it can get over the base top at 13.50 then it has resistance at 14.05 followed by 14.75 in the short run. A stop can be placed at 12.90.

Cognex, Ticker:$CGNX

Cognex is testing support of the 26.70 – 26.90 area for the 4th time since November. If it falls under 26.60 it is a good short to support at 25.75 with further support under that at 24 and 23. The MACD has just kissed and is now moving more negative and the RSI is sloping lower, supporting more downside. Short interest accounts for about 2 days of volume and is only at 2% of the float, so it should not be difficult getting a borrow and the risk of a short squeeze should be low. Use the support line as a stop.

Cherokee, Ticker:$CHKE

Cherokee has been basing since early February and Friday tested the extreme of the base from the 18th. If it can get that level, over 17.25, then it has resistance at 17.90, before it can make a run above 18.50 to resistance at 19. It is primed as the RSI is sloping up and cracking the mid line, the MACD is positive and improving and the Bollinger bands are starting to expand with this move. The downside, it is a thin stock so smaller size is required and be prepared for a wide bid ask spread and some volatile moves as shown during the base. Use the middle of the base near 16.80 as a stop.

CIT Group, Ticker:$CIT

CIT Group has put in a 3 week base at 43. If it can get over 44 it has resistance at 46 and then at 48.50. The MACD just turned positive and is crossing bullishly but the RSI is flat lining near 40. Look for this to slope up as confirmation of a move higher, and use the 43.30 area as a stop,

CARBO Ceramics, Ticker:$CRR

Carbo Ceramics is testing support for the 2nd time at 114.05 since climbing there at the beginning of February. The morning star printed Friday was with big volume so it may hold and reverse. If so then 119.74 would be the first resistance. But with the RSI pointing lower and the MACD also suggesting lower, prepare for a break through 114 to run lower to support at 105. The short interest is nearly 7 days of volume so beware and definitely use a trailing stop if short to protect some gains as it falls.

Up Next: The Rest

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