A Gradual Return to Normal

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Broadcom: Buy

Metastock

Broadcom (BRCM - commentary - Cramer's Take) lost half its value between August and October. From there, though, it built a substantial base, with highs and lows repeating. Two weeks ago it moved up through the upper limits of that consolidation and it did so with heavier volume. That suggests a good advance is about to begin. It has pulled back on lighter volume, giving us an opportunity to buy at a better level. I think it can be bought in this vicinity.

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Amerisource Bergen: Buy

Metastock

Here is another potential long position. Amerisource Bergen (ABC - commentary - Cramer's Take) bottomed with the big market washout on Oct. 10. It tested the level in November and then started up. Notice the increase in volume when the stock moves higher and the decrease in volume when it pulls back. The MACD crossed to the plus side in late October and has stayed there. The two moving average lines have gone positive more recently. I would like to see a little more pulling back on light trading before buying this one.

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Hecla Mining: Buy

Metastock

A few weeks ago I started suggesting buying the gold stocks. Last week I added the silver stocks to the list. Here is another silver stock that looks like a buy. Hecla Mining (HL - commentary - Cramer's Take) seems to be recovering from a plunge that took away about three-quarters of its price. The downtrend has become a sideways move with a small upward bias. Volume looks good. This is a low-priced and speculative issue and should only be bought with that caveat in mind. However, it looks as though it could have a very large advance.

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Know What You Own: Petrohawk's competitors include BP (HK - commentary - Cramer's Take), Comstock Resources (CRK - commentary - Cramer's Take) and Apache (APA - commentary - Cramer's Take).

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At time of publication, Arms had no positions in the stocks mentioned.

Richard Arms is a renowned stock market technician who invented the Arms Index (often referred to as the TRIN), which has become a mainstay of market analysis, appearing in The Wall Street Journal and Barron's. Arms also developed the widely used technical method Equivolume Charting. Since 1996, he has been publishing the Arms Advisory newsletter for money managers and financial institutions. He also has authored Stop and Make Money: How to Profit in the Stock Market Using Volume and Stop Orders, Profits in Volume, Volume Cycles in the Stock Market, Trading Without Fear and The Arms Index, and has been honored with the Market Technicians' Award for Lifetime Contribution to Technical Analysis. Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. Richard appreciates your feedback; click here to send him an email.

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