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Top Stocks With Helene Meisler

 Top Stocks

More Upside to Be Enjoyed in Coming Days

BY Helene Meisler | 04/16/14 - 07:30 PM EDT
Action: APA, PSX, RS, TLM

The Market

(Special Note: Due to the long holiday weekend, Top Stockswill not be published Thursday evening. The regular schedule will resume Monday morning, April 21. Wishing all who celebrate a very Happy Easter!)

It was a decent day in the market, although I was surprised that we could rally so far. The Nasdaq is now up almost 150 points from the lows of yesterday afternoon.

The best thing I can say about the market is that we are still oversold. Also, the put/call ratio stayed relatively high today, showing a reluctance to join the party. Anecdotally, it seems as though everyone is back on board, but statistically they are not.

The problems with today's rally centered on the banks and the semis. Neither group participated in a big way. The banks have not played along in so long that they could now be irrelevant. But they do not seem that way. Their absence eventually catches up to us, it seems. That is probably why I continue to expect another move lower when this oversold rally is finished.

The semis, which we looked at in late March as a shaky group, are finally starting to show their stripes. While this group did not participate today, it is a bit oversold still. The eventual downside target on the PHLX Semiconductor Index (SOX) is near 540.

However, it is the action in bonds that concerns me the most. The S&P 500 has rallied 50 points in essentially 24 hours and there has been no letup in bond yields in that time. Stocks and bonds have been moving in opposite directions almost the entire year. This is yet another reason I believe we are seeing only an oversold rally, not a good low.

I was asked why I think the market will need to retest the lows, so let me explain. When indicators and statistics make lower lows, a retest is almost always in the cards. In this case, the number of stocks making new lows expanded on Tuesday to levels not seen in almost a year. That will need to be retested at some point.

The other day, I showed the Nasdaq McClellan Summation Index and discussed how it had made a lower low. That too will need to be retested.

For now, we remain oversold and should enjoy more upside in the coming days. I still expect that to be in fits and starts, especially now that we have tacked on so many points in such a short period of time. Support on the S&P is now back around 1840-1845.

Read Helene's latest column here.

New Ideas

I like the chart of Talisman Energy (TLM:NYSE). It is very early in its basing process. I suspect that the stock will get up to that $11-$11.25 area and then pull back and improve as it begins to eat through that resistance. Just keep in mind that the base is small for now and so probably early in making the move. There is no need to chase.

Today's Indicator

The 10-day moving average of the put/call ratio just sits here, trying to decide if it wants to go down or up.

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.

Curiously enough, Apache (APA:NYSE) continues to look like a base. There is some decent resistance as it gets into the $86-$87 area, which it ought to clear eventually. It might be too soon for the stock to work much higher than resistance in the next few weeks. By that I mean that if it cannot break out quickly, it is likely to remain in this base-building mode for at least another month or so.

I cannot recall the price at which we originally liked Phillips 66 (PSX:NYSE), but it was before that big move in the fourth quarter of 2013. The stock has done an admirable job of consolidating that rise. There is an unfulfilled target at $86-ish, so as long as it does not violate that $76 area, hold on and wait for that target.

The contrarian in me wants to believe that the Market Vectors Russia ETF Trust (RSX:NYSE) is making a head-and-shoulders bottom. But I am not so sure if you should bottom fish in it. If it can cross that line around $23.50, that will improve the chart dramatically. If that spike down below at $21.50 gives way, then this was just a consolidation before going lower. My guess is it rallies and fails.

Regards, Helene Meisler

Ripe for an Oversold Rally
Action: BHI, CLX, FB, ISRG, LNKD, MAT

It will not be an easy ride, but it should take us higher, perhaps toward month's end.

04/15/14 - 07:53 PM EDT
Oversold by Wednesday
Action: CPB, DO, PFE, WYNN

If the market goes down tomorrow, I would still look for a lift as we head into the holiday weekend.

04/14/14 - 07:49 PM EDT

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