D.R. Horton

The homebuilders have been on a tear, but they recently pulled back for a rest. Now, D.R. Horton (DHI - commentary - Cramer's Take) is again challenging a 52-week high. I'd like to see the stock consolidate in this range for a while and build a bit of a base. However, that may not happen, especially if the market thinks the Fed will stand pat on interest rates for a while. The middle Bollinger Band should continue to act as support, so any long positions should be protected by a stop just below the middle Band.

Merrill Lynch

I last wrote about Merrill Lynch (MER - commentary - Cramer's Take) a couple of weeks ago, noting that it was channeling higher. It had been bouncing off the 50-day moving average on each decline. This time around, the stock appears to be finding support at the 20-day average, the middle Bollinger Band. That's a higher relative low (relative to prior lows within the Bollinger Bands). Of course, it's a higher absolute low in terms of price also. Assuming this low holds, the stock should easily climb through $60 and move up to tag the upper Bollinger Band once again.

Scientific-Atlanta

Scientific-Atlanta (SFA - commentary - Cramer's Take) had been in a beautiful uptrend since last summer, but it formed a double top and promptly reversed course after gapping lower in October. Money flow is forming a series of lower highs and lower lows, and the accumulation-distribution line appears to be topping out. The reversal may now be complete, with the stock trading below $30. I think it's shortable right now, with a buy-stop at around $31.

Merck

I've been watching Merck (MRK - commentary - Cramer's Take) for the past few days for signs of a bottom. Yesterday the stock rocketed up past $45 on twice the average volume. My bet is that it will test $50. After that, who knows? The pharmaceutical sector has been under lots of pressure. Is all the selling done? I'm guessing we're closer to the end than to the beginning, but I'm not into picking bottoms in a budding bull market.

Be careful out there.

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