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Some strength in the list

December 28, 2006
tags: , , , , , ,

I won’t go through them all, but we do have some strong ones in our midst.

The $SOX index has been struggling a bit lately. It broke both diagonal and short term horizontal support and has been drifting since. It’s still above the 200 MA, though, and hanging onto the 50. So I’m not counting it out yet, but it’s looking kinda ugly.

In contrast, however, our own VSEA has been very impressive. We’re all so proud! Breakout on big volume. The news isn’t obvious to me as to why, but the volume doesn’t lie. It’s a bit extended right now for an entry, but it’s definitely one to watch for an entry point, particularly if the SOX and the Nasdaq get their act together. I wrote about the Semis in this post. Don’t forget about the increased money for buy backs.

CRDN broke above a bull flag pattern I mentioned in Scrolling Through the List. I think it is probably debatable where to draw the flag pole, but the theory is that once the Flag (The area of consolidation between two lines) is broken to the upside, the stock should continue the distance equal to the height of the pole. Since late November showed consolidation after a big move up off the 41 area, it was a bit of a flag pattern too. I’ll place the pole of the most recent flag from the low of Nov. 30 at 51.78. The high of Dec. 5 is 57.15. In round figures, the height of the pole is $5. Taken from the place where the flag was broken, about 55.80, the target would be 60.80. I almost took this trade on Tuesday, but chickened out because I don’t trust the low volume in the market during this holiday season and the volume on this one was very low on the bullish candle. Regardless, resistance is at 62.50

Looking at it more closely, I think the move off 41 in November could be seen as a flag pattern with a pole that is about 13 pts. long. It was a big move on earnings and kicked off with major volume. From the breakout on 12/05 above 54, the target would be 67. The breakout was on more than 150% average volume and the subsequent pullback and successful test of new support was on average volume, a bullish sign.
It may seem a lofty target, 67. But looking at the 5 year chart, it doesn’t look so absurd. They just announced a follow up order from the Army for 133 million bucks, the largest single order it has ever received. The PEG on the stock is under 1. The 67 area just may be in the cards.

With a positive New Homes Sales report out, the Housing sector looked strong today. KBH looks to be ready to move higher. There are many resistance points along the way, so an options trade will be trickier. Profit targets would be good. Otherwise, a stock position would be ideal.

Crude oil has been week in recent days.

Yet the $OIX confirmed a bullish Harmai pattern today by closing higher than the two day pattern.

Our UNT did form a bullish engulfing pattern today at support, but I’m not in love with the technical picture on the chart and I’m sure there are other oil stocks out there that are stronger.

Like the OIX, the Oil Services Index shows some good bounce potential with a bullish engulfing pattern right at the 50 and 200 MAs for support. The index is just below the support line I’d have liked to see hold, as well as the 200 MA, but it’s not yet a convincing break.

From that sector, our very own BHI looks very promising. The harami formation today needs a higher close tomorrow for confirmation. The stock is poised on horizontal support and the 200 MA with the 20 rising through it. Very bullish potential. Low risk entry here with upside to the order of 7 or even 12 points.
Remember that this one trades at a discount to its group and has a PEG of about .50. Very low. Very good.

That’s all for now.

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