Fitz Bits: GS, Two Ways

Today, we're going to take a look at the following stocks:

• Goldman Sachs (GS - commentary - Cramer's Take)
• Agrium (AGU - commentary - Cramer's Take)
• SunPower (SPWR - commentary - Cramer's Take)
• Altria (MO - commentary - Cramer's Take) ETF
• Nabors (NBR - commentary - Cramer's Take)
• Compass Minerals (CMP - 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.

3 Stocks I Saw On TV

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.

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Goldman Sachs is the "best of breed" in the financials. But the problem is that the breed is really out of favor. As such, GS has about as good a chance of getting "Best in Show" as Uno the beagle does at surviving a weekend get-together at Michael Vick's house. But at some point, this breed will lead, and Goldman will be the best bet.

As I see it, there are two ways to play this. First, we could buy at the bottom of the channel -- like now! Second, we could wait until the stock climbs back above the 50-day moving average. At that point, the easy money will have been made, but there will still be plenty of room to run.

The nice thing about trading is that you really don't have to choose which approach to take. Instead, take a little bit now, and then wait for a climb above the 50-day moving average.

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Agrium has been bouncing on both sides of the 50-day moving average for a while, but the trend is decidedly higher. With the stock now right back up at the early February high, I'd look for more gains. It'll take a while for the stock to challenge the December high, but I think it's gonna do it.

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SunPower appears to be completing a dramatic reversal pattern, The stock made a lower low in early February, but is now back above the 20-day moving average for the first time this year. If you bought this breakout, be alert for more backing and filling. After such a steep decline, the bulls usually require more than a few weeks to get their act together.

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Altria continues to bounce off the 30-week moving average. Ever since the breakout from that volatility squeeze in mid-2006, buyers at the 30-week moving average have done quite well. That's where the stock is now, and you know what to do.

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Nabors has run from below $24 in late January to almost $32 now. That's just $8 ... but it's also 33%! That's a big run in a short period of time. Because of this dramatic run, I'm a bit cautious about buying the stock now. But declining to buy doesn't mean that it's time to sell. Instead, if you're long, just be cautious about a potential correction and keep a snug stop, or plan to buy more on a pullback to around $29 or $30.

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Compass Minerals has gone parabolic and is up four of the last five days. With each close occurring outside the upper Bollinger Band, this is one incredibly strong stock. But notice how yesterday's trading volume was just about half of the prior day's volume. That tells me that the buying pressure is waning and that it's time to take some off the table. While CMP might be a compelling buy at $45, it'll be easier to buy it back then if you take profits now.

Be careful out there.

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At the time of publication, Fitzpatrick was long Agrium, 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.