Still positive overall, but what’s up (i.e., down) with the NASDAQ?
Once again the weekly trend pictures for all of the major indices remain solidly positive, with one exception – the NASDAQ, whose trend picture, though not yet negative, reflects the composite’s recent underperformance relative to the rest of the market. The question is, is this just a consolidation, or something more ominous?
Semiconductors aren’t the culprit this time – the trend picture for the Semiconductors HOLDRS ETF (SMH) is currently solidly positive – but instead stocks like Dell (DELL), Microsoft (MSFT), eBAY (EBAY), and Amgen (AMGN), and others. Interestingly, all of the aforementioned stocks are currently showing up on my “oversold” scans, and – except for DELL – are all on my active watchlist of put-selling candidates.
This seems consistent with the view – currently supported by the overall trend picture – that the NASDAQ is consolidating and in the process of setting the stage for its next move up, in sync with the rest of the market. As always, however, should the trend pictures for the market averages turn negative, all bets are off.
New positions
UST, Inc. (UST) – Late last week I sold some May 45-strike puts on UST as the stock pulled back a bit after rallying to the 45 level – a level it hasn’t seen since August of last year.
It has been performing well recently and appears to be in an intermediate-term uptrend. If it drops back to the 41-42 level in the short term, I’ll consider selling more puts on it.
Bunge Limited (BG) – Also late last week I opportunistically sold some May 50-strike puts on BG when the stock sold off sharply after the oilseed processor announced lower-than-expected earnings and also lowered its outlook for the year.
Short term, BG looks like it could easily drop back down to the 50 level, where it might be expected to find some support – at least temporarily. If it drops below 50, the next longer-term support levels appear to be about 45 and 40, respectively.
Watchlist
New stocks of interest on this week’s “upside strength” scans include Allstate (ALL), Anheuser Busch (BUD), Bank of America (BAC), Citigroup (C), Comcast (CMCSK), Conagra (CAG), Deutsche Telekom (DT), Heinz (HNZ), Kraft (KFT), Limited Brands (LTD), PPG Industries (PPG), Sigma Aldrich (SIAL), SPX Corp. (SPW), and Yum Brands (YUM).
Currently “oversold” and/or “beaten down” stocks of interest include some familiar names – including Ford (F), Fresh Del Monte Produce (FDP), Frontline (FRO), HCA (HCA), and J.M. Smucker (SJM) – and a new one: Microsoft (MSFT).
