Top Trade Ideas for the Week of May 23, 2011: The First 5

After reviewing over 800 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 a move higher for Gold but more downside for Crude Oil. The upside path looks to continue for US Treasuries but a pullback for the US Dollar Index. The Shanghai Composite looks to reverse higher but not drastically with the Emerging Markets continuing lower or consolidating. Volatility looks to remain in check. The Equity Index ETF’s all look lower but like last week they will look to the QQQ for leadership to try to pull them higher, with the SPY and IWM looking weakest without any help. Use this information to understand the major trend and how it may be influenced as you prepare for the coming week ahead. Trade’m well.

(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:

AK Steel Holding, Ticker:$AKS

AK Steel has come off of support at 14 but then failed to break above the 200 day Simple Moving Average (SMA). As it fell again the Relative Strength Index (RSI) is also falling. If it gets below 14 then it is a good short with support next at 13 and 12 below that. Short interest is just over 10% so consider using options. The June 14/13 Strike Put Spread closed at 36 cents on Friday.

Comerica, Ticker:$CMA

Comerica is moving lower in a descending triangle and about to test the support area at 36.20 for the fourth time since March, each time from a lower high. If it breaks through this time then it is a good short with support lower at 35 and then 33. The RSI sloping downward and the Moving Average Convergence Divergence (MACD) indicator crossed negative support more downside. Short interest is over 8% so consider using options.

Dendreon, Ticker:$DNDN

Dendreon found a bottom just under 36 and is rising now with a MACD that is improving towards a cross and a RSI that is testing the mid line. If it can get over 39.09 then the next resistance higher is at 39.80 followed by 40.80 and 42.50 before a retest of the high at 43.90.

Dresser-Rand, Ticker:$DRC

Dresser-Rand found a bottom last week printing a long legged doji and has been rising the last 3 days. If it can get through the 50 day SMA and over 49 then it has resistance at 50 followed by 55 and then 56. The RSI is sloping steeply higher to help out and the MACD indicator is about to cross bullishly positive. A stop can be placed at 48.

Knight Transportation, Ticker:$KNX

Knight Transportation started moving higher last week after finding support at the low from November. Friday it closed the gap down. With an RSI that is rising and a MACD about to cross positive it is prepped for a continued move higher. Look for resistance first at 17.80 and then 18.10 with the next level above that at 18.80. A stop can be placed in the 17.10 – 17.25 range. The short interest is 6% so if it gets running it could squeeze higher quickly.

Up Next: The Rest

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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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