03-09-14 Weekly Review & Watch-list

For about the past four weeks the theme has remained unchanged, buy the stronger names with good setups and they perform well.  Fairly straightforward market conditions, yet people still refuse to believe it and continue to fight it.  I can understand that the market is getting extended and it will pull back at some point; but let the market dictate when and don't start trading out of frustration, also known as emotion.  With that said there were a lot of strong stocks with potential breakouts that buyers started backing off of towards the end of the week and put in a lower low.  In these situations I will be watching for where the next high takes place, whether it is lower or higher and that will dictate how I trade them.  There are also a lot of stocks that have made huge moves and are now hitting resistance, these stocks have used up their rocket fuel for now and likely need a rest whether through price or time.  This will naturally result in less setups taking place in my universe of around 250 stocks.


First off in the S&P the first thing that pops out at me is the rising 50 and 10 day averages continuing to power higher.  That tells me all I need to know about the overall market trend.  Then when I break it down looking at the hourly chart I see that we put in a low on Monday and that is the last swing low we put in.  I made a tweet on StockTwits today that really summarizes how I feel about the S&P here.  Other than that I would say that if we hold above the big gap up, this market is a lot stronger then we all think.  In the bonds the weekly chart really took hold of them this week.  The 50 day average over powered the price action and sellers took hold making a lower low on the daily chart.  You have to be aware of that bigger picture weekly chart.  Next week I will be looking at three things: 1) if price can reclaim that low on the daily chart, 2) where the next high takes place, and 3) how price reacts to a rising 50 day average with the longer term trend being down.  Gold is in the same position as bonds are with the longer term downtrend and the rising 50 day average.  This is an example of a big move into a resistance area on the daily chart, so a consolidation or pullback wouldn't surprise me.  It would be a long way down on the daily chart for bears to put in a lower low so I think bulls will be confident to buy any pullback if one occurs.  A good area would be around the 50 day average or the $125 area.  I wouldn't be buying without one of the two occurring.

The financials took home the gold this week up 3.15%.  Next up materials at 2.3% and industrials at 1.67%.  Biotech got hit hard this week and is currently putting in lower highs and lows, but the overall healthcare sector is still doing good and putting in higher highs and lows.  Until that changes, don't fight it.





All of the internals are still strong and the VIX divergence from the S&P continues.  This could negatively effect the S&P when it sell off, but the catch is that it has to sell off first.  We don't know how long that is going to be from now, it could be Monday it could be in April.. we have no idea.


Here are 24 stocks that I think look good.  Some of these are hard to buy and will take good risk managing to pull the trigger on them, but others are just getting started and I think will be strong as/if they get going.  I will be using the daily chart to identify the trend and the overall price action, then drilling down to the hourly charts to trade the structure.  If you can learn to do that, there is no reason for me to go through each one of these and talk about what I am looking for.  Breakouts and continuations is what I am looking for.

If you want updates to these names, hear about any changes, or new setups as they come along then follow me on Twitter or StockTwits @M5amhan.  Thanks for reading.

Trade well,
-Michael