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Today we'll look at some reader requests: C, NITE, DVN, UTX and SOL Today we'll take a look at some reader requests:
1. The average daily trading volume needs to exceed 250,000 shares. If a stock trades too thinly, chart analysis doesn't help much, because there just are not that many traders involved. One big buy or sell order can move the stock in ways that chart analysis just cannot predict. So let's stay above 250,000 daily shares. 2. The stock really needs to be trading above $5. Sub-$5 stocks don't get the same treatment by institutions and portfolio managers. Also, many traders set their trading screens to ignore stocks below $5 just to cut down on their trading candidates. While I'm sure your favorite penny stock is the next undiscovered gem, I'm not in the business of breaking news stories ... so once your gem is discovered, let me know, and I'll take a look at the chart. 3. Make sure you check my recent "3 Stocks" videos. I don't want to be too redundant, so if I've recently covered a stock in video format, I won't repeat it here.
Hopefully, you've noticed that I alternate between daily and weekly bars in the charts. It's important to understand the underlying rationale for choosing one time frame over another. I differentiate between these time frames in pretty simple terms. The longer time frame -- the weekly bar chart -- is my "decision" time frame. I want to remain in phase with the trend, and I use the weekly bar chart to identify the trend. So I'll feature a weekly chart when I want to emphasize a certain aspect of the prevailing trend -- not a specific buy or sell point. This weekly chart is the timeframe in which I make my decision: Do I want to buy or sell the stock? The daily chart is my "action" time frame. Once a decision is made on the basis of the weekly time frame, then we zoom in on the daily chart to choose that level at which action is taken. The daily time frame is my preferred frame of reference for actually implementing the decisions I've made on the weekly chart. In your own analysis, make sure you are using different timeframes for different things, otherwise your actions will largely be a function of your emotions.  Citigroup continues to print lower lows. I will admit that I am completely baffled as to why financial media types repeatedly try to predict the bottom in financials. I can only guess that these folks are trying to build a reputation based on having called the bottom. Here's a suggestion: Let them do it with their money. Don't join them! Citigroup and the rest of the tickers in this gang of criminals will ultimately find a bottom. Once that happens, trust me -- there will be plenty of time to buy. Why do I say that with such authority? Because there is so much pain in this chart that you just know there are many, many folks who simply want their money back. They'll sell whenever the price hits their buy point. As Jim Cramer says: "Don't buy! Don't buy! Don't buy!"  If you're looking for something "financial," then check out Knight Capital. This broker is moving higher now, despite a lousy market. I'd stay long until the 50-day moving average stops defining support.  Devon has been in a nice uptrend for the past several months. The stock has been churning sideways since late April. The general approach is that a trend is assumed intact until it is broken. So our bias should be bullish, though we need a break above the June high to confirm that bias. That's where I'd buy.  United Technologies has been in a nose dive for the past week or so, but the real weakness started in May. Yesterday's tiny advance just might mark a short-term bottom. But if you bought yesterday's strength, then keep a very tight stop below yesterday's low. If it gets hit, you don't want to be long anyway.  ReneSola continues to retrace the March-to-May move. If the stock falls below the June low, the next level of support is clear down around $12. For a $17 stock, that's a pretty big drawdown. Tread lightly. Be careful out there.
At the time of publication, Fitzpatrick had no positions in the stocks mentioned, though positions may change at any time. Dan Fitzpatrick is the publisher of StockMarketMentor.com, an advisory newsletter and educational forum dedicated to teaching effective risk management and trading methodologies to aspiring traders and investors. He is a former hedge fund manager and a member of the Market Technicians Association, and he now trades from his home in San Diego, Calif. While Fitzpatrick holds various securities licenses, he does not give recommendations to buy or sell stocks. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. He appreciates your feedback; click here to send him an email.
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