"Everyone has a plan 'till they get punched in the mouth" - Mike Tyson

January 21, 2013

Weekend Techinical Observations - 13 tweets in 1 post

S&P dividend index is reaching a new relative high versus the S&P 500.  The yield chase is still in effect.

Is Biotech ETF IBB trying to form a handle?

Despite the bears claiming an end of the financials rally I still have unmet targets significantly higher.  Maybe your favorite idea will set up on a market pull back.

Soft Drinks and Tobacco are starting to break out.

The medical devices/equipment space is breaking out across the board.  Lot's of decent setups still remain on a longer term basis.

Airlines set off a trio of sell signals this weekend.  They also seem very stretched to the upside.  

Energy looks potentially explosive.  See the post below on the home page.

Gold miners are firing a relative strength buy.  Many are at or near support and possibly creating good risk/reward.

JNK and HYG are continuing to outperform TLT.

XRT has a target ~8% points higher but I can't find many good setups.  Maybe it is because cotton is breaking out??

Restaurants have lagged and are now at heavy resistance.  It may be a good time to short individual names.

Other currencies are breaking down versus the dollar.  Does this mean the dollar isn't a sure bet to continue breaking down?

India, Spain and China are all close to (if they haven't already met) their short term targets.




 

Energy looks set for a major move

Energy charts are up against significant resistance levels and look primed to make a significant long term move.  The equity rally after the elections have now matured to a point where energy stocks generally start to flourish.  You can see XLE is starting to perk up a bit.  XNG is trying to make a big push as well.  







If you also take into account the last week's action in the energy service index OSX, an energy break out parade may just be getting started.  



One thing to be aware of is the markets have pulled back each time these indexes have reached the resistance trend lines capping prices.  Maybe this happens again and prices consolidate closer to the breakouts.  Maybe the sector just breaks out.  We don't know, but if these patterns break out portfolio managers need exposure to the space.  




Also, this potential move is so large, it could be a great time to get long for any type of trade or investment.  Here are some examples that represent some of the bountiful opportunities in the space


DVN is at an interesting level as flat divergences have shown up in the weekly chart as large volume has poured in.  This leads me to believe we are at bottoming levels.  Also, with prices near the panic lows of 2011, the risk-reward is pretty good for investors.




RRC is sitting near all time highs in what appears to be a large consolidation pattern.  The company has been a leader in nat gas production growth.  I actually own some because it seems well positioned.  



WG is a speculative play, with high levels of debt and unstable earnings and cash flow.  However, the company is securing deals and has had 20+% bookings and revenue growth.  The bet is that the company will grow it's way out of it's problems.  It would be more attractive if there were more shorts betting against it.  



MRO is flat winning and can continue winning when it clears the all time highs around 36.  Trading 10x next years expected earnings with a 2% yield; there is plenty of room for the valuation to stretch.  



Other stocks that are well positioned technically and in terms of growth include: OAS, ROSE, CLR and CHK.  If there are any you like that I haven't mentioned, feel free to post them in the comment section!  Good luck!  

You can sign up for my free market letter noting key technical developments (scroll up and to the right )

You can also follow me on Stocktwits: @AaronJ and tradingview.com: iChart








Reminder:

All ideas shown on this blog represent the authors opinion based on the data available.