Bullish Indicators Still in Effect

(To do my Equivolume charting, as in the charts that appear in this column, I use a charting program called MetaStock. To learn more about this method, read my series of columns, Trading With Equivolume.)

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Nationwide Health Properties: Buy

Metastock

Nationwide Health Properties (NHP - commentary - Cramer's Take) has the characteristics of a stock that is going to go higher. After a decline in which volume came in on the drops, we are seeing an advance with volume coming in on the up days. There is now a nice series of higher lows and higher highs. A little over a week ago, it broke upward through resistance with very impressive volume and a big trading range. Since then it has, typically, pulled back on lighter volume, forming a small pennant. Now, with strength starting to show up again, it looks as though it should be bought.

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99 Cents Stores: Short

Metastock

In spite of the market decline from July to November, 99 Cents Stores' (NDN - commentary - Cramer's Take) stock climbed well. However, in late November it took a sudden hit, with heavy volume and a wide trading range. Now, after a rally, it appears to be starting to weaken again. The MACD has crossed to the minus side, and we have a series of lower highs. This stock looks as though it could be sold short.

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Alliant Energy: Short

Metastock

Alliant Energy's (LNT - commentary - Cramer's Take) chart look very different than most we are seeing at this time. It rallied off the Oct. 10 market low, but the rally was not enough to break it out of the downtrend. Recently volume has tended to come in on the downside rather than the upside. MACD, across the top of the chart, has gone negative, and so have the two volume-adjusted moving averages that overlie the price plot. It broke the uptrend line with increasing volume and a widening trading range, and now has rallied slightly, but on disappointing volume. It looks as though it could be shorted around current levels.

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Know What You Own: Alliant's competitors include Wisconsin Energy (WEC - commentary - Cramer's Take), Integrys Energy (TEG - commentary - Cramer's Take) and Xcel Energy (XEL - 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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