Fitz Bits: A Google Bottom?

Today we'll look at some reader requests:

• Google (GOOG - commentary - Cramer's Take)
• Freeport-McMoRan (FCX - commentary - Cramer's Take)
• Symantec (SYMC - commentary - Cramer's Take)
• U.S. Steel (X - commentary - Cramer's Take)
• Patriot Coal (PCX - commentary - Cramer's Take)

Each day, I'm featuring several reader requests for the current technical take on a stock. I can't assure you that I'll get to yours, but I will certainly make every attempt to do so, as long as the stock meets the following criteria.

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 time frames for different things, otherwise your actions will largely be a function of your emotions.

---

Google may be ready to reverse this downtrend. The stock continues to trade below the 50-day moving average, but the money flow index shown in the top clip is moving back to the midline. I'd still look for resistance at around $400 -- the 50-day moving average. But if this stock starts making higher lows, that resistance could give way to an upside reversal. Wait for it -- don't anticipate it.

---

This weekly chart of Freeport-McMoRan shows how oversold the stock is. Is it too late to sell? Um, yep. After all, last week's advance was the first time the weekly close has been positive since August. The stock is about $6 above the recent low, which makes risk management difficult. If you're a bull, buy lightly until the stock forms more of a base.

---

Symantec is now well below the 50-day moving average and ripe for a rebound. But this is a broken stock, so you've got to maintain reasonable expectations. All that churning between $13.50 and $15 in October has produced a lot of unhappy campers who will likely sell into any rally. So keep a tight stop just below $12.

---

Notice how the 10-day exponential moving average defines the top of this downtrend in U.S. Steel? Each rally ends at that short moving average. But downside momentum is starting to wane, so we've got to look ahead. If you see the stock start trading above the 10-day moving average, be patient and wait for a pullback to test that key moving average. If buyers show up, then the stock should hold above $40. That's when I'd buy.

---

Patriot Coal continues to put in a base, but I wouldn't buy this right now. It's too far above prior support around $12 and hasn't shown enough strength to move above resistance. So keep this on your watch list. If the bulls push the stock above resistance, it might be worth a trade. But I think the better move would be to be patient and wait for a retest of $12. In such a volatile environment, it's likely to happen!

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.