Top Trade Ideas for the Week of October 22, 2012: The Rest

• Posted by Greg Harmon
• on October 21st, 2012

Here are the Rest of the Top 10:

Aetna, Ticker: $AET

Aetna, $AET, is building a bull flag just under resistance created by the gap down in April. The Relative Strength Index (RSI) is working off the technically overbought condition while the Moving Average Convergence Divergence indicator (MACD) is positive but fading, which is normal in a flag. A break of the flag higher carries Measured Moves to 46 and 50. This stock reports earnings Thursday morning.

Cerner, Ticker: $CERN

Cerner, $CERN, is testing support for the third time in 3 months, and just above the gap up from February. The RSI is bearish and running lower with a MACD that is negative and growing. All signs point lower. A gap fill would take it to 63.21 and the 3-box reversal Point and Figure Chart (PnF) carries an even lower price objective of 60. This name reports Thursday after the close.

Comerica, Ticker: $CMA

Comerica, $CMA, is moving lower with expanding Bollinger bands, a RSI that is bearish and falling and a MACD that is negative and growing. The price by volume shows that there is a void under 28.80 as well. Ugly.

Covanta, Ticker: $CVA

Covanta, $CVA, broke above the consolidation zone and back tested that break out Friday. It has a bullish RSI and a MACD that is positive to support more upside. The channel break carries a target higher to 18.75.

Gilead Science, Ticker: $GILD

Gilead Science, $GILD, is testing support within a consolidation zone. The RSI is still in the bullish zone but is retreating fast with a MACD that is negative and growing, both supporting a downside push. This name reports Tuesday after the close so take profits if it moves before then or wait.

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After reviewing over 1,000 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, sees heading into the new options cycle Gold and Crude Oil ready to pullback further with the possibility that Crude Oil continues to consolidate. The US Dollar Index is poised to continue to move sideways while US Treasuries are biased lower. The Shanghai Composite is biased to the upside with the long term downtrend while Emerging Markets look to continue to consolidate. Volatility looks to remain low but is hinting at a move higher now, leaving the intermarket bias for the equity index ETF’s SPY, IWM and QQQ, mixed. Longer term biases lower for the US Dollar and Treasuries support the upside while potentially rising Volatilty supports more pullback. The Indexes themselves reflect this with the SPY the strongest and still consolidating while the IWM is biased lower and the QQQ the pulling back. All three are biased to the downside in the short run but the IWM and QQQ are at longer term rising trendline support. Use this information as you prepare for the coming week and trade’m well.

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