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Top Stocks With Helene Meisler

 Top Stocks

No Love for the Biotechs

BY Helene Meisler | 12/23/14 - 07:03 PM EST
Stocks in Focus: COUP, CPB, SON, GILD

The Market

Today was all about the collapse in the biotechs, which means so much else was ignored. I am not bullish on the biotechs, but that's because I am not a fan of stocks at highs after a big run; I just do not like to chase momentum. You will see Gilead Sciences (GILD) is discussed below and last week we discussed Biogen Idec (BIIB) and Celgene (CELG). I was not a fan of any of them but I did not envision today's collapse.

As bad as IBB was, it hasn't broken a thing yet. There is a good deal of support between $285 and $290 so being that tomorrow would be day three if it gets down there, I'd look for a short-term snapback rally.

But that doesn't mean I like the biotechs. There is nothing compelling in the charts for me to think they can do much more than snap back. Either they will have a short-term rally and then break down or they will just go sideways to build a new base. After witnessing the collapse in oil and then trying to catch a falling knife in a group that was over-owned and over- loved, I have no interest in doing it. Any break of $285 and you complete a top in this chart.

The related group that got little or no coverage was the drugs or healthcare. The Health Care Select Sector SPDR ETF (XLV) has a lower high but has not yet broken that $67 low. This group has been where a lot of the big-cap dividend-paying money has gone. Any breakdown here and the next target is down near $63. This chart looks toppy to me but until or unless it breaks $67, it can still be saved.

Then there was the massive move in bonds. The yield on the five-year note is back to where it was in early October, albeit there was a higher yield on it in September. If we look at a chart of iShares 20+ Year Treasury Bond (TLT) we see it has not broken the uptrend line but it did take out last week's lows. If this cannot bounce off $122, it changes the dynamics in the bond market since it has been nothing but lower rates and higher prices in 2014, especially in the last few months.

Aside from these individual moves, nothing much changed statistically in the market. I still believe we should have a pullback (Nasdaq already pulled back today) and then rally one more time into the new year. Then we'll assess where the indicators stand as we get overbought.

Since my next newsletter will be Monday evening, I want to wish everyone a Merry Christmas. For those who celebrate, may your holidays be merry and bright!

New Ideas

You can see some down and out garbage is starting to lift its head. Last week we had EGHT and tonight I offer up (COUP). I must admit I didn't know any stocks still called themselves dotcoms anymore, but that is a base and should measure toward $20, keeping in mind there is a minor gap around $19. Below $16 and I'd be gone.

Today's Indicator

The McClellan Summation Index has turned back up, though the increase has been rather pathetic considering the rally. One harsh down day and this will falter and turn right back down.


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 Top Stocks is not intended to provide personalized investment advice.

Email Helene here.

Campbell Soup Co. (CPB) is stuck in a trading range and I am trying to decide if it is going to break out to the upside. For now, I am undecided because unlike so many other defensive names, this one has lagged, thus I'll call it a trading range. Should it trade as I have drawn in, I would be more interested in the chart from the long side.

Sonoco Products (SON) has broken out but it is also quite stretched now. I'd prefer to see some milling around and backing and filling, retesting the $44 area. As long as the stock can stay above $42 I believe it has a decent chance at making its way up to the $48 to $50 area. Let me note the one thing that bothers me: that breakout in June (at 44) that simply collapsed without retesting the high. Thus, I do not want to see this break back below $42.

When we last checked on Gilead I had thought it could rally but there was a retest of that spike low in October still to come. It has obviously collapsed. The first thing to note is that we should use a three-day rule if trying to catch a bottom: It should start to find its footing and attempt a rally on or just after day three. In the bigger picture, however, it broke down from a diamond top, which is bearish. The target is near $80. I suspect there will be a lot of bottom-fishing in GILD in the next week or two, but any rally near $100 and I'd be pleased to get out.

Regards, Helene Meisler

Number of New Highs Is Unimpressive
Stocks in Focus: MDLZ, LINE, K, DO

We are not short-term overbought yet.

12/22/14 - 06:21 PM EST
The Market's First Real Test of Oomph
Stocks in Focus: AMZN, WYNN, PEP, GIS, BABA

We are not yet short-term overbought, but we are at resistance.

12/21/14 - 08:17 PM EST

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