Fitz Bits: Two Entries for FSLR

Today we'll take a look at some reader requests:

• First Solar (FSLR - commentary - Cramer's Take)
• Cree (CREE - commentary - Cramer's Take)
• Goldcorp (GG - commentary - Cramer's Take)
• UST (UST - commentary - Cramer's Take)
• iShares TIP Bond (TIP - commentary - Cramer's Take) ETF
• Humana (HUM - 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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First Solar is bumping up against prior resistance at $220. But notice how the stock had been grinding around the 50-day moving average for about a month. These last few days have chewed through that resistance level. Now we've got two viable entry points -- a move above $220, or a pullback to the 50-day moving average, right around $200.

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I've covered Cree pretty frequently over the past few months and have received a few requests for an update. First, this is one ugly stock. I mean, the price action is all over the place. But the last few lows have created a pretty reliable support line. So I'd be a buyer on any pullback, and I would let some go at $34 as a function of discipline.

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Goldcorp peaked a couple of weeks ago, while the relative strength index (RSI) peaked in late February. This type of negative divergence often presages a pullback in price. But now that GG is back above the 50-day moving average, I'd look for higher prices. But those higher prices are likely to come grudgingly, as all those folks who failed to sell in the low $40s will be jumping at the chance to sell now.

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UST is struggling to move above $56. Each time the price hits that level, buyers can get all the stock they want without having to pay up. Until that dynamic changes, I'd just stand on the sidelines and keep my money working elsewhere.

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The iShares TIPS Bond ETF has been moving nicely for the past few months. The gains haven't been dramatic, but they have been reliable. With the TIP back down at support, I'd be a buyer now, with a stop just below the February low.

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I don't have much to say about Humana. This stock has done a great job of imitating Wile E. Coyote. It just fell off a cliff earlier this month and bounced pretty hard at $35. But the price action is really sluggish now, as any buying meets happy sellers who just want what's left of their money back. I'd just stay away from this one.

Be careful out there.

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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.