Fitz Bits: Bears Almost Done With Deere?

Today we'll look at some reader requests:

• Deere (DE - commentary - Cramer's Take)
• CenturyTel (CTL - commentary - Cramer's Take)
• Amgen (AMGN - commentary - Cramer's Take)
• Vale (RIO - commentary - Cramer's Take)
• National Oilwell Varco (NOV - 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.

Deere is back down to the January low. After the nasty April-June decline, it's about time the bears finished selling. I'd keep a tight stop below $70 and hang on. But would I buy? No -- because there are just too many folks who bought at higher levels and would be eager to sell on any further price advance.

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CenturyTel has really been jumping around for the past couple of months. But selling has persistently kept the stock down below $36. Now, the bulls could be getting the upper hand. I'd wait for the stock to move above the June high before feeling confident that the breakout was real. That's when I'd buy.

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This weekly chart of Amgen shows how the bulls have finally managed to push the stock above the 200-day moving average for the first time in a long, long time. But the stock is overbought on a daily basis. I'd be patient and wait for a pullback ... then I'd buy.

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Vale has retraced about 50% of its January-May run. The bulls are buying the stock at support. I'd look at $34 as a key level. If the stock falls below that level, I'd sell.

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National OilWell Varco is forming a bull flag that is close to breaking out. If the stock remains above $90 for a while, I think it's safe to buy.

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.