Market Analysis

The above chart is of the Nasdaq

The above chart is of the Dow.

The Nasdaq and Dow have both logged one distribution day since the follow through on March 20th. The distribution day for each index occured on March 25. The market is still in a confirmed rally, however, having a distribution so close to the follow through day is a cause for concern.

From IBD:

On Thursday, stocks also banked losses, but in higher volume than the previous session's.
That gave the market a distribution day, just four sessions after its March 20 follow-through. A round of professional selling so soon after a follow-through is often a negative sign for the market

Stocks on the lookout

Research in Motion (RIMM) - nice cup shaped base break out. Currently testing its support line. Yesterday's volume is a cause for concern, especially if it breaks the support line.

Meritage Homes (MTH)- I know this is a little crazy considering the mess the housing market is in but take a look at this chart. The accumulation speaks for itself. Notice that there is hardly any distribution. Recently broke out of its base. Currently looks to be pulling back to its support line on low volume which may be a good time to accumulate shares.

Home Depot (HD)- another stock involved in the terrible housing market. Nice accumulation and very little distribution. The chart shows a perfect cup w/handle. The handle is especially important. Notice that there is hardly any selling. The pivot point (buy point) would be $30.10. The high of the right side of the cup is $30, add $0.10 to that and you get your buy point.

Devon Energy (DVN) - one of the few stocks within the energy group that hasn't taking a beating as the price of crude fell. Still holding up strong. The distribution is worrisome. Would like to see the volume pick up as it breaks out.

Priceline.com (PCLN)

Daily chart for the past 9 months. Still trading within its base. Will be keeping an eye on this stock as we approach the summer travel season.

Weekly chart. Nice accumulation over the past couple months. Still within base.

This is a 5 year chart. Notice the high amount of accumulation. Those buyers are institutions who are putting hundreds of millions of dollars to work. A very positive sign is that we have not seen any high volume selling which means most of these institutions are still holding shares. This stock was definitely one of the big winners of 2007. Lets see if it can keep it up!

Intuitive Surgical (ISRG)

Still in a base, just reclaimed 10 week moving average. Volume is very weak. Looks like it may be regaining some momentum. If it does then you definitely don't want to miss out.

Mastercard (MA) 5 yr chart

Above is a 5 year chart of Mastercard which really only goes back to May '06 when MA when public. Anyways, I put this chart up to draw some similarities between Visa (V) and their IPO. After their IPO, MA was in a base the first 4 months before breaking out and advancing over 200%. I think Visa may stay in a base for awhile and then break out to new levels. Its worth keeping your eye on.

HerbalLife (HLF)

Breaks out of cup shaped base that started in early October. Broke out on average volume which is a concern.

Titan Machinery (TITN)

Titan Machinery had its IPO back in early December. Strong accumulation over the past 2 weeks. Attempting to break out of cup shaped base that began in mid February.

Mastercard (MA)

Mastercard has been in a base since early December and is just now starting to break out of it. Strong accumulation as it comes off its 10 week moving average.

Nike (NKE)

This is a weekly chart of Nike for the past 9 months. Nike started to carve a cup shaped base in late December and is just now breaking out of it. The accumulation in the last 2 weeks is a very good sign.

Stocks I'm Considering

I'm looking at Nike (NKE) and Intuitive Surgical (ISRG). Both show very strong price and volume action. Almost bought Google (GOOG) yesterday on a hunch that it has hit the bottom. Priceline.com (PCLN) may be another good buy since were heading into the summer travel season. Mastercard (MA) is still on the radar, hit a new high yesterday on low volume; may be getting ready to break out. Visa (V) had the largest IPO in U.S. history last Wednesday. Was up over 39% from its offering price of $44. China Life Insurance holds a $300 million stake in Visa. Mastercard and Visa are both immune from the ongoing credit crisis. They generate revenue from fees, leaving the banks responsible for the money collection.

Market in Confirmed Rally

It's safe to invest. According to IBD, the market is now in a confirmed rally. Start by investing a little money now and then gradually increase your position as the stock moves up. Let the stock show you that its using your money well. Example: Let's say you plan on buying $10,000 worth of stock A which is trading at $50 a share. Start first by buying $5,000 @ 50. If the stock goes up to $51, buy $2500 worth of stock. If the stock goes up to $52, complete your final purchase of $2500.

Devon Energy (DVN)

Still within trendline, overbought. Look for possible correction.

BPZ Resources (BZP)

Breaks out on good volume

Canadian Natural Resources (CNQ)

Very nice cup w/ handle formation, handle a little shallow. Would like to see volume pick up.

Occidental Petroleum (OXY)

Beautiful cup w/handle formation, would like to see volume increase in the upper half of the handle.

Sandridge Energy (SD)

Reported 4Q profit of $0.04 cents a share on Monday. CEO said he intends to purchase $100 million worth of company stock for his personal account off the open market. Stock has reached new highs on good volume.

Exchange Traded Funds (ETF's)

ETF's to consider:

USO-United States Oil Fund. Tracks the price of crude oil.

UNG- United States Natural Gas. Tracks the price of natural gas.

UGA- United States Gasoline. Tracks the price of gas at the pump.

DBB- Powershares base metals

DBA- Powershares agricultural fund

DBP- Powershares precious metals

SLV- tracks the price of silver

Market Analysis

Each of the 3 major indices logged a distribution day on Friday. Volume wasn't that high in the morning but picked up in late afternoon. A distribution day is defined as one day followed by another day with higher selling. Major cause for concern.

Devon Energy (DVN)

Breaks out of cup shaped base, sets new highs on strong volume.