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Top Stocks With Helene Meisler

 Top Stocks

Another Wild Day in the Market

BY Helene Meisler | 12/17/14 - 06:12 PM EST
Stocks in Focus: LVS, SUNE, CLX

The Market Another wild day in the market, but at least the market is now oversold as per the Nasdaq Momentum Indicator discussed here last evening. I would have preferred if the market had waited until the end of the week, but I won't argue against it, since we were heading in that direction.

What we need to watch is the put/call ratio, though, as it has been really high all day. It ended the day at 124%, which is unbelievably high, especially for such a strong market day. That would go on the bullish side of the ledger. The flip side is that such a high put/call ratio pushed the moving average of the ratio up, not down. Keep in mind that the moving average heading up is bearish, while moving down is bullish. What we have to watch for, for the rally to continue, is that the ratio needs to turn down so that the moving average turns down.

Then, we had 90% of the volume on the upside. Shockingly, this came so soon after we had 90% of the volume on the downside just last week. The last time that happened was October of 2013, which is highlighted on the chart below. As you can see, that was a low that just kept on going.

The same 90% upside days also occurred in the final days of 2012, and we know that 2013 was strictly a one-way affair to the upside.

What we don't have is the intermediate-term indicators pointing upward or oversold yet. I find that bothersome. They feel like they need more time to get to an oversold condition. For now, we'll just call this an oversold rally that should still give the market some fits and starts, but it is likely to continue until we get back to a short-term overbought condition.

New Ideas Since there has been such a strong rally in the energy names, I want to revisit Apache (APA), which we looked at just over a week ago. At the time, I noted the downside target had been achieved when it hit $56. It subsequently went a smidge under $55, and then reversed and had quite a day today. But I would like you to step back and consider the longer term. It is possible that what we saw in the last two weeks will turn out to be the head of a head- and-shoulders bottom.

Understand that would mean months of up and down. The first trip would be up to fill that gap near $70, then back down, and so on. It's too soon to tell, but this is a longer-term possibility I have considered.

There are not many bases out there, but I saw the chart of 8x8 (EGHT) and thought it might be on the verge of breaking out. The spike high at $8.75 will be a shorter-term problem, but if it can take that out, the measured target is near $10. I would use a stop below $7.75.

I was asked about Intercept Pharmaceuticals (ICPT) as a bottom-fish candidate, and I will say it has one of my favorite patterns: a W. It obviously needs to cross that downtrend line and take out last week's high, but if it can do that, then $160 ought to be doable in the near term.

Today's Indicator The Volume Indicator is still not as oversold as I prefer, but it is getting very close to an oversold condition.

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.

I really thought Las Vegas Sands (LVS) was trying to bottom and improve in November, but I was dead wrong. It has collapsed, maybe worse than oil stocks have. Today's reversal is a step toward bottoming, but if it cannot recapture that lower channel line, then the trend would remain down.

SunEdision (SUNE) is an interesting chart, because it is in the process of filling a gap, yet it left an island overhead in early November. I think it should bounce from here during an oversold rally, but if it breaks below $18, I would not want to be long it anymore. I am uncertain on where it can go on the upside, as there is resistance all the way up. The stock has not done enough work on the downside for me to believe it can clear resistance easily.

Earlier this year, I had been a fan of the big base on Clorox (CLX), although I did not like when it broke that uptrend line. The target had been in the $100 area, and that's where it got to. It has now spent two months milling around this area. I am not a fan of buying stocks at their highs like this, especially in this volatile market. But if it breaks out above $102-ish, it would measure another four points toward $106.

Regards, Helene Meisler

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