Top Trade Ideas for the Week of November 7, 2011: The Rest

• Posted by Greg Harmon
• on November 6th, 2011

Here are the Rest of the Top 10:

Ariad Pharmaceuticals, Ticker: $ARIA

Ariad Pharmaceuticals, $ARIA, reported earnings on Thursday last week and has moved higher since, back to resistance at 12.10. As it reaches there the Relative Strength Index (RSI) is bullish and remains moving higher while the Moving Average Convergence Divergence (MACD) indicator stopped its fall and is increasing again. These both support further upside. The short interest on this name is high at over 15%. On a break over 12.10 the Measured Move (MM) higher is to a target of 13.10, near the July high.

KLA-Tencor, Ticker: $KLAC

KLA-Tencor, $KLAC, is rising back to late October resistance near 48. As it gets there the RSI is firmly in bullish territory and rising and the MACD is increasing again after looking like it might cross negative a few days ago. Both supporting further upside. A break higher above resistance has a MM to 51.50 near the March high. Above that there is clear air to 55.

Level 3 Communications, Ticker: $LVLT

Level 3 Communications, $LVLT, reported earnings on Thursday before the market opened and disappointed falling further. The fall may have stopped Friday when it printed a Hammer doji at 22.30 support, if it confirms on Monday with a higher close. But the falling RSI and MACD that is growing more negative support further downside. And under 21.40 it could start to get ugly. The problem with playing this short is that short interest is over 100%, so a face ripping rally could happen at any time via a short squeeze.

Mellanox, Ticker: $MLNX

Mellanox, $MLNX, is either making a quadruple top in the 35 to 36 range, or breaking out of a symmetrical triangle higher. The target on the triangle break is 39.75. As it rises the RSI is rising and the MACD has crossed positive. Both are supporting further upside. All of the Simple Moving Averages (SMA) are also sloping higher, another positive. One last point, you might notice that there are no mentions of quadruple tops in technical analysis books.

Occidental Petroleum, Ticker: $OXY

Occidental Petroleum, $OXY, traded in a broad channel between 98.00 and 107.50 from February until August before falling lower and bottoming in October. It is now testing resistance at the bottom of that channel for the second time in two weeks. The RSI is rising and firmly bullish over 65 and the MACD is positive and started to increase again toward the end of last week, both supporting further upside. Above the channel bottom there is a gap to fill between 101.95 and 103.95 before it can test the top again.

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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 head into next week looks for many of the trends from the past week to continue. Gold and Crude Oil look to head higher. Slightly weaker but still looking higher is the US Dollar Index and US Treasuries look to be in a range with the next move biased higher but not yet determined. Both the Shanghai Composite and Emerging Markets also look better to the upside, with the Chinese market stronger. Volatility is in a lower range but stalled at the top of it creating an environment for the Equity Index ETF’s SPY, IWM and QQQ to head higher. The US Dollar and Treasuries are likely to drive the direction of the equity markets next week. If they stay in a range or consolidate then look for Equities to continue to move slowly higher. A sharp rally by either will likely tank the equity markets. Use this information as you prepare for the coming week and trade’m well.

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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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