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Top Stocks With Helene Meisler

 Top Stocks

In Like a Lion

By Helene Meisler | 03/01/15 - 04:00 PM EST
Stocks in Focus: EOG, APA, CBI, XON, INCY, ANIP

The Market

We finally got a pullback, if we can call a six-point loss on the S&P 500 a pullback. It is interesting that the market was actually down on the week. What is even more interesting is that the S&P has been down not only three days in a row but six out of the last eight trading days. So far, that is how it is working off the overbought reading.

Very few of the indicators changed on Friday, so there isn't much to review on the indicator front. While I believe this coming week will see folks concentrate on the employment number Friday, the market is more apt to react to oil and oil stocks as well as interest rates, and subsequently financials and interest-rate-sensitive stocks. For example, oil rallied Friday and the oil stocks did not join the fun. The support line for Energy Select Sector SPDR ETF (XLE) keeps moving lower, as you can see. When I first drew this line in early February, it was at 80, then it moved to 79, and now it is at 77.50.

Last week I wrote that it's not just about holding over the line, but there had to be buying to go along with it; that remains the case. If the XLE can hold over that line, that's good. But it is only bullish if it can rally well off the line. Last week it held but couldn't rally. I suspect it holds the line again but I am unconvinced it can rally.

To go along with oil, the transports are on the watch list. They have not made a new high since November. That means there is a Dow Theory non-confirmation in place -- that is a long-term negative divergence. There is short-term support around 161 on the iShares Transportation Average (IYT) chart (thin line), so I suspect unless oil surges this week, the IYT will find short-term support there. The question is if it can get up and over that downtrend line, and my initial thought is it will fail to do so in the next month or so.

When it comes to interest rates, the 2% area has become a magnet for the 10-year note. My view has been that rates should rise again after this pullback to the 2% area, but thus far, all we've seen is a lot of thrashing around back and forth at this level. It isn't even helping to watch the utilities because they are sitting right at major support.

It's always difficult for me when we visit support for the second time as we are doing now on the Utes. My inclination is to think they will break, yet in this environment of such low rates, stocks of all kinds tend to be saved instead of breaking. Should the Utes break down, I suspect they will hold at 580. But it would make sense that rallies back to 590 to 600 are sold. The Utes have been a good tell for interest rates, so I'll keep my eyes to see if 590 breaks.

I continue to believe March is more apt to be volatile, and not an extension of February's action.

New Ideas

I have been asked about oil stocks, and I reviewed Exxon Mobil (XOM) Thursday evening, and here are two more that were requested. I don't see much to like in the oil stocks. Either they will hold and start to curl under to make the charts get better, or they will have a nice shakeout by plunging to support and holding. Those are the only ways I can see myself warming up to the oil stocks.

EOG Resources (EOG) is trapped between these two lines and thus hasn't done anything wrong or right since making a low in October. It is likely to come down and test the $87 to $87.50 area (spike low), but my question is whether it breaks it and tries for the lower (thick) line around $84. If it holds the thin line around $87, it makes the chart more interesting (long) than if it comes all the way down to the thick line at $84. For now, expect more near-term downside.

Apache (APA) has actually done better than most oil stocks because it has a very solid uptrend line. My concern is that it won't be able to hold $63 on this trip down. It has already visited that level twice and has not made a higher high off the bounce either time. Typically, that means there is not enough buying to push it higher once it finds support.

Today's Indicator

The Hi-Lo Indicator has rolled back over. What is fascinating is that it has moved with the market consistently, except in the last month. In the last two months, as it headed down, the market headed up. Either way, the number of stocks making new highs is not terribly bullish.

Q&A

Helene welcomes your questions about Top Stocks and her charting strategy and techniques. Please send an email directly to Helene with your questions. However, please remember that TheStreet.com Top Stocks is not intended to provide personalized investment advice.

Email Helene here.

Chicago Bridge & Iron (CBI) has made a small base that measures to the $52 to $53 area. That also happens to be where the downtrend line comes in. It's obvious that if it comes down to fill in the gap left from its earnings report last week, the stock is buyable. I would consider it much stronger, though, if it doesn't come all the way down and fill in that gap and, say, holds $45 instead.

Intrexon (XON) has a measured target of about $43, so it is very close to its target. The stock hasn't done a thing wrong, so if you wanted to use a trailing stop you could below $39. I would be inclined to take some profits, though, since the stock has had a great run and is more likely to consolidate or correct now.

Incyte (INCY) had a target off the base of $75 and you can see what happened when it hit $75: It meandered back and forth for several months. This is a great example of what happens when a stock hits a target; it tends to digest around that area or correct severely. It rarely just keeps going. It is now in an up-channel; therefore, I expect the dips to continue being bought. The upside should be limited to the top of that channel, although the stock hasn't done a thing wrong, as it has made higher highs and higher lows. Should the stock get above $90, the 90/100 rule comes into play (90% of the stocks that make it to 90 will make it to 100). My guess is there is at least one more push upward in this chart.

ANI Pharmaceuticals (ANIP) had a target off that base of $54 and once again you can see that it reached that target and then went sideways for three months. The mini base that occurred during those three months measured to $70. While the stock hasn't done a thing wrong yet, breaking that small uptrend line signals that upside momentum is waning; therefore, I would be inclined to use that as a stop.

Regards, Helene Meisler

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