Top Trade Ideas for the Week of May 7, 2012: The Rest

• Posted by Greg Harmon
• on May 6th, 2012

Here are the Rest of the Top 10:

Aetna, Ticker: $AET

Aetna, $AET, dropped hard following the earnings report, confirming the Shooting Star the day before. It bounced to the 100 day Simple Moving Average (SMA), be low the gap down high and has retreated again to a double bottom at 43. As it sits there the Relative Strength Index (RSI) is bearish and pointing lower, not oversold, and the Moving Average Convergence Divergence (MACD) indicator is negative, but hold. A move under 43 has some good downside to it with a Measured Move to 38.

Edwards Lifesciences, Ticker: $EW

Edwards Lifesciences, $EW, gapped higher at same time after reporting earnings, met resistance briefly at the January high, and continued until last week. Wednesday it printed a Spinning Top and another on Thursday which were confirmed lower on Friday. The RSI is technically overbought and working it off lower with a MACD that is starting to fade. Both support a pullback. But an overbought condition can be worked off through time as well, so watch for a move over Wednesday’s high to continue to the July highs and a Measured Move to 100.

Freeport McMoran, Ticker: $FCX

Freeport McMoran, $FCX, everyone’s favorite proxy for Copper, has been bouncing off of support at 36 in a consolidation pattern for nearly 2 months. During this period the RSI has been making new higher highs but barely over 50 and remains bearish. Currently it is working on a 8 day Negative Divergence with a target lower at 35.59. That would break support and trigger a Measured Move lower to 30. It will take a move over all the SMA at 40 to change the bias to bullish.

Lockheed Martin, Ticker: $LMT

Lockheed Martin, $LMT, is building a rising wedge or megaphone pattern, with a base at 87.70. AS it approaches the support it has a falling and bearish RSI making a 8 month low and a MACD that is negative and growing more so. Friday also marked the first major break below the 50 day SMA since November. Look for a break of support to short it.

Regions Financial, Ticker: $RF

Regions Financial, $RF, broke above resistance two weeks ago and held over that support in last weeks carnage. The RSI remains bullish but pointing lower with a MACD that is positive but may be fading. The volume at price bar between 6.15 and 6.50 shows a lot of energy spent there and could offer good support as a stop for a trade higher.

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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 as we recover from the combined effects of celebrations around Cinco de Mayo and the Kentucky Derby has the market is decidedly turning more bearish. Gold looks to continue in the range with a break biased to the downside while Crude Oil looks to crash lower. The US Dollar Index seems content to move sideways while US Treasuries are biased higher in their consolidation range. The Shanghai Composite is on the verge of a full blown bull market while Emerging Markets look to continue to the downside. Volatility looks to remain low but has an increased chance of moving higher. These influencers paint a montage that sets up for lower levels for the equity index ETF’s SPY, IWM and QQQ. Their charts agree with the inter-market set up on the short term but are less convinced on the intermediate term. The SPY looks the strongest with the IWM next and the QQQ the weakest. Use this information as you prepare for the coming week and trade’m well.

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